Assuming consumption and leisure are both normal goods, hours worked will fall when the wage increases if

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When the wage increases, the substitution effect makes leisure more expensive relative to consumption, encouraging more work. However, the income effect, assuming consumption and leisure are normal goods, means individuals feel wealthier and may choose to work less to enjoy more leisure. If the income effect dominates the substitution effect, overall hours worked will fall because the desire for more leisure outweighs the incentive to work more due to the higher wage.

Assuming Consumption and Leisure Are Both Normal Goods, Hours Worked