Assume that all workers prefer to work 40 hours a week at a given wage.If real estate jobs asks workers to rotate between working 20 hours a week and 60 hours a week,which of these workers is likely to work for the lowest relative average hourly pay in real estate?
A) workers with large income effects
B) workers with small income effects
C) workers with large substitution effects
D) workers with small substitution effects

Question

Quizplus · Accepted Answer

Workers with large substitution effects will likely accept the job that requires rotating between working 20 hours a week and 60 hours a week because they value the flexibility to adjust their work hours based on their personal preferences. However, this job would result in a lower average hourly pay due to the nature of the rotation, resulting in a greater difference between the higher and lower hourly wage rates. Therefore, workers with large substitution effects are likely to work for the lowest relative average hourly pay in real estate.

Assume That All Workers Prefer to Work 40 Hours a Week