Sammy is required by her employer to work a standard eight-hour workday. Suppose her marginal rate of substitution of leisure for income exceeds the wage rate at this level of work effort. We can conclude that Sammy will:

Question

Quizplus · Accepted Answer

When the marginal rate of substitution of leisure for income exceeds the wage rate, it means Sammy values an additional hour of leisure more than the income she would earn from an additional hour of work. Therefore, she would feel overemployed at her current level of work effort, as she would prefer more leisure time over the income from working those hours.

Sammy Is Required by Her Employer to Work a Standard