Income effect of lowering wages implies
A)workers prefer leisure to work.
B)an increase in the productivity of labor.
C)a fall in the demand for labor.
D)workers would want to work more.

Question

Quizplus · Accepted Answer

The income effect of lowering wages implies that workers would want to work more hours to maintain their income level. When wages decrease, workers may feel the need to compensate for the loss in income by working additional hours, thus showing a preference to work more rather than enjoying leisure.

Income Effect of Lowering Wages Implies