If Amber is willing to work additional hours if her wage rate increases,the substitution effect must outweigh the income effect.

Question

Quizplus · Accepted Answer

The substitution effect occurs when a worker increases their hours because of an increase in their wage rate, meaning that the worker is substituting leisure time for work time. The income effect occurs when a worker increases their leisure time because of an increase in their wage rate, meaning that the worker is able to afford the same level of consumption with fewer hours worked. If Amber is willing to work additional hours as her wage rate increases, it means that the substitution effect is stronger than the income effect for her. Therefore, the answer is A - True.

If Amber Is Willing to Work Additional Hours If Her