The "substitution effect" for labor supply states that people work more as wages rise because the opportunity cost of leisure also rises.

Name: The "substitution effect" for labor supply states that people work more as wages rise because the opportunity cost of leisure also rises.
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Question

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As wages increase, the opportunity cost of not working (i.e., leisure time) becomes higher, leading individuals to substitute leisure with work, hence working more.

The "Substitution Effect" for Labor Supply States That People Work