Related to the Economics in Practice on page 127: Uber drivers can choose to drive as many or as few hours as they desire, and most drivers have another job and drive for Uber as a way to supplement their income. Assuming leisure is a normal good, if Uber increased the wages it paid its drivers then the substitution effect would result in drivers working ________ and buying ________ leisure.
A) more; less
B) more; more
C) less; less
D) less; more

Question

Quizplus · Accepted Answer

The substitution effect occurs when an increase in wages makes the opportunity cost of leisure time higher, leading workers to substitute leisure time for work. Therefore, if Uber increases the wages it pays its drivers, they would likely work more, resulting in less leisure time.

Related to the Economics in Practice on Page 127: Uber