If a firm offers to pay a worker $10 for each hour of leisure the worker gives up,the $10 implies the:
A) marginal rate of substitution between leisure and income.
B) market rate of substitution between leisure and income.
C) market rate of transformation between leisure and income.
D) marginal rate of transformation between leisure and income.

Question

Quizplus · Accepted Answer

The market rate of substitution between leisure and income is the rate at which an individual is willing to substitute leisure time for income. In this case, the firm is offering a payment per hour of leisure given up, which represents the market rate of substitution. The other options are not applicable in this scenario as they refer to different concepts related to the trade-off between income and leisure.

If a Firm Offers to Pay a Worker $10 for Each