The _____ effect on labor supply occurs when workers supply less labor at higher wages because the additional income increases the demand for leisure.
A) income
B) substitution
C) complementary
D) elasticity

Question

Quizplus · Accepted Answer

The income effect on labor supply occurs when higher wages increase workers' income, leading them to value leisure more and thus choose to work fewer hours, as they can afford to enjoy more leisure time with the higher income.

The _____ Effect on Labor Supply Occurs When Workers Supply