For most low-wage earners,
A)the income effect of a wage rate increase is likely to be larger than the substitution effect.
B)the substitution effect of a wage rate increase is likely to equal the income effect.
C)the opportunity cost of leisure is high.
D)the substitution effect of a wage rate increase is likely to be larger than the income effect.

Question

Quizplus · Accepted Answer

For low-wage earners, a wage increase makes work more attractive compared to leisure, so they are likely to work more hours, indicating a larger substitution effect than the income effect.

For Most Low-Wage Earners