As the wage rate increases, the income effect tends to reduce the quantity of labor supplied to the market.

Name: As the wage rate increases, the income effect tends to reduce the quantity of labor supplied to the market.
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Question

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When the wage rate increases, the income effect causes workers to feel richer and therefore they may choose to work fewer hours (or not at all) in order to enjoy more leisure time. This results in a decrease in the quantity of labor supplied to the market.

As the Wage Rate Increases, the Income Effect Tends to Reduce