Meryl works 10 hours a day in an hourly job that pays $15 per hour. Suppose her wage rate increases to a really high rate of $10,000 per hour. In this case, Meryl will ________.
A) supply more than 10 hours of work, because her wage rate is much higher
B) supply less than 10 hours of work, because she can now afford the time off
C) at first supply more, and then supply less than 10 hours of work
D) both A and B apply at the same time, and Meryl?s supply will depend of their relative strengths

Question

Quizplus · Accepted Answer

The correct answer is D because the decision to work more or less when wages increase significantly depends on the individual's valuation of leisure versus income. Some might work more to earn more, while others might work less, valuing their free time more now that they can afford to.

Meryl Works 10 Hours a Day in an Hourly Job