If Jerry's demand for leisure increases as the wage increases

Question

Quizplus · Accepted Answer

When Jerry's demand for leisure increases as the wage increases, it means that the additional income makes him value his free time more than the extra work, indicating that the income effect (which leads to more consumption of normal goods, including leisure, as income increases) dominates the substitution effect (which would lead to working more hours because the opportunity cost of not working has increased).

If Jerry's Demand for Leisure Increases as the Wage Increases