Assume that Stan just received a promotion and raise.In terms of labor supply,the substitution effect of a higher wage will lead him to:
A)supply fewer hours of labor.
B)supply more hours of labor.
C)substitute leisure for work.
D)reduce work time to zero.

Question

Quizplus · Accepted Answer

The substitution effect of a higher wage will lead Stan to supply more hours of labor as the higher wage makes working more attractive compared to leisure time.

Assume That Stan Just Received a Promotion and Raise