Assuming a worker's money wage rose from $10 per hour to $20 per hour while all product price have doubled,then in the classical model,this worker would
A)supply more labor after the wage increase.
B)supply less labor after the wage change.
C)supply the same amount of labor after the hourly wage increase.
D)demand less leisure.

Question

Quizplus · Accepted Answer

According to the classical model, the real wage (purchasing power of the wage) is what matters for labor supply decisions. In this scenario, although the money wage has doubled, the product prices have also doubled, resulting in the same real wage. Therefore, the worker would supply the same amount of labor even after the hourly wage increase.

Assuming a Worker's Money Wage Rose from $10 Per Hour