In terms of labor supply,the income effect of a higher wage causes a(n):
A)decrease in leisure time.
B)increase in the quantity of labor supplied.
C)decrease in the quantity of labor supplied.
D)reduction of leisure time to zero.

Question

Quizplus · Accepted Answer

The income effect of a higher wage means that as individuals earn more per hour, they can afford to work fewer hours while maintaining the same level of income, leading to a decrease in the quantity of labor supplied as they opt for more leisure time.

In Terms of Labor Supply,the Income Effect of a Higher