Sadie works at a factory for $15 an hour and typically works 40 hours a week.Sadie gets a pay raise and now earns $20 an hour.She decides to work 45 hours a week at $20 an hour.Her response:

Question

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The statement implies that Sadie's decision to work longer hours at a higher wage indicates that the price effect of the pay raise (the incentive to work more due to higher wages) outweighed the income effect (the reduction in the need to work due to a higher income). This is an upward sloping labor supply curve. This decision is typically observed.

Sadie Works at a Factory for $15 an Hour and Typically