When an individual's wage rises,the substitution effect tends to
A)increase hours worked.
B)decrease hours worked.
C)leave hours worked unchanged.
D)it is impossible to predict what will happen to hours worked.

Question

Quizplus · Accepted Answer

The substitution effect predicts that when the wage rate increases, workers will tend to substitute work time for leisure time because the opportunity cost of leisure time has increased. Therefore, the worker will work more hours to maintain or increase their income level.

When an Individual's Wage Rises,the Substitution Effect Tends to