An increase in the wage from $6 per hour to $6.50 per hour causes a worker to increase her hours worked from 40 to 45 hours per week.For this worker,which effect dominates?

Question

Quizplus · Accepted Answer

The substitution effect dominates in this scenario because the increase in wage makes working more attractive compared to leisure, leading the worker to substitute leisure for additional work hours.

An Increase in the Wage from $6 Per Hour to $6.50