Increases in the real wage will lead workers to supply more hours of labor.

Question

Quizplus · Accepted Answer

According to the theory of labor supply, workers are more likely to supply more hours of labor when the real wage increases because the opportunity cost of leisure time increases. In other words, as workers can earn more money per hour worked, the benefit of choosing leisure time over working decreases, leading them to work more hours. Therefore, the statement is true.

Increases in the Real Wage Will Lead Workers to Supply