Suppose there is diminishing, but not negative, marginal utility and no inflation. If the price of labor goes up, a worker will supply more labor. (Hint: The worker measures his marginal costs in terms of hours worked.)

Question

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If the price of labor (wage rate) increases, the opportunity cost of not working (leisure) becomes higher, incentivizing the worker to supply more labor to maximize utility, despite diminishing marginal utility.

Suppose There Is Diminishing, but Not Negative, Marginal Utility and No