The demand curve for leisure will slope upward if leisure is a ______ good and the income effect of a wage change is relatively _______.
A) normal; large
B) inferior; large
C) normal; small
D) inferior; small

Question

Quizplus · Accepted Answer

A normal good is one for which the demand increases as income increases. Therefore, if leisure is a normal good, people will want to consume more leisure as their income increases. The income effect of a wage change refers to the change in the quantity of leisure demanded as a result of the change in income due to the wage change. If the income effect is relatively large, it means that people's consumption of leisure is quite sensitive to changes in income. Therefore, if leisure is a normal good and the income effect of a wage change is relatively large, the demand curve for leisure will slope upward.

The Demand Curve for Leisure Will Slope Upward If Leisure