Figure 12.3
-Refer to Figure 12.3.In Panel A, at low wages (segment i)

Question

Figure 12.3 
-Refer to Figure 12.3.In Panel A, at low wages (segment i)

Quizplus · Accepted Answer

At low wages (segment i), the substitution effect outweighs the income effect. This means that as wages increase, individuals are more likely to substitute leisure time for work. Therefore, the opportunity cost of leisure time decreases and people are willing to work more. The income effect is not as strong at this wage level, as the increase in income is not large enough to cause a significant change in the individual's behavior.

Figure 12.3 -Refer to Figure 12.3.In Panel A, at Low Wages (Segment