A person who wins a large sum of money in the state lottery is _____

Question

Quizplus · Accepted Answer

The individual is likely to decrease the amount of work offered at each wage rate because the winning of a large sum of money will likely reduce the need to work for income. This results in a decrease in labor supply due to a decrease in the opportunity cost of leisure time. The income effect dominates the substitution effect in this case, as the individual may view the lottery winnings as providing enough financial security to reduce the need to work for income.

A Person Who Wins a Large Sum of Money in the State