During the past year,Teddy had a part-time job at which he is willing to work 30 hours each week.During Teddy's annual review,his boss grants him an 8 percent increase in his wage.As a result of the wage increase,Teddy is now willing to work 25 hours each week.Teddy's opportunity cost of ________ has risen and for Teddy the substitution effect of the wage hike is ________ the income effect.

Question

Quizplus · Accepted Answer

Teddy's opportunity cost of leisure has risen because he is now willing to work more hours per week (30 to 25) for the same wage increase. The substitution effect of the wage hike is less than the income effect because Teddy is willing to work fewer hours despite the wage increase.

During the Past Year,Teddy Had a Part-Time Job at Which