When the wage rate rises,a worker chooses to replace some leisure hours with work hours,even if he would remain equally well off.This phenomenon is known as

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The phenomenon described is known as the substitution effect, where a worker substitutes some of their leisure time for more work hours in response to an increase in the wage rate. The income effect would involve a change in overall purchasing power due to a change in wage rate, but in this scenario, the worker remains equally well off. Compensating differentials refer to differences in wages between jobs that have different non-monetary characteristics, and intertemporal substitution relates to the idea of adjusting work hours over time in response to changes in wage rates.

When the Wage Rate Rises,a Worker Chooses to Replace Some