The income leisure trade off

Question

Quizplus · Accepted Answer

The income leisure trade-off is a fundamental concept in neoclassical theory, which argues that individuals make decisions about how much to work based on their preferences for leisure time and the opportunity cost of that time in terms of foregone income. As the wage rate increases, individuals will generally be more willing to work, sacrificing leisure time in exchange for higher earnings. As the wage rate decreases, they will be more likely to enjoy leisure time, sacrificing earnings for more free time. Therefore, option A is the best choice. Options B, C, and D are not correct as they do not correctly describe the concept of the income leisure trade-off.

The Income Leisure Trade Off