With respect to the labour supply curve, the income effect
A) lowers the opportunity cost of labour.
B) raises the opportunity cost of labour.
C) influences a person to work less as the wage rate increases.
D) reinforces the substitution effect.

Question

Quizplus · Accepted Answer

The income effect influences a person to work less as the wage rate increases because higher wages mean they can maintain the same standard of living with fewer hours worked.

With Respect to the Labour Supply Curve, the Income Effect