The income effect of an increase in the wage rate on the quantity of leisure demanded
A)makes leisure more expensive which leads people to work more.
B)makes leisure less expensive which causes people to work less.
C)gives people more purchasing power and causes people to work less.
D)gives people less purchasing power and so they will work more.

Question

Quizplus · Accepted Answer

An increase in the wage rate increases purchasing power, allowing individuals to afford more leisure, potentially leading them to work less.

The Income Effect of an Increase in the Wage Rate