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Figure: Income and Leisure Opportunities
-(Figure: Income and Leisure Opportunities) The figure Income and Leisure Opportunities refers to Keisha when she has 100 hours per week for working or leisure. There are two time allocation lines, one for a $10 hourly wage rate and one for a $20 hourly wage rate. Keisha's optimal choice is point A when the wage is $10, and her optimal choice is point C when the wage is $20. As the amount she earns increases from $10 to $20 per hour, Keisha will work _____ hours because of the substitution effect.
A) 10 fewer
B) 15 more
C) 25 fewer
D) 50 more

Question

Use the following to answer questions:
Figure: Income and Leisure Opportunities 
-(Figure: Income and Leisure Opportunities) The figure Income and Leisure Opportunities refers to Keisha when she has 100 hours per week for working or leisure. There are two time allocation lines, one for a $10 hourly wage rate and one for a $20 hourly wage rate. Keisha's optimal choice is point A when the wage is $10, and her optimal choice is point C when the wage is $20. As the amount she earns increases from $10 to $20 per hour, Keisha will work _____ hours because of the substitution effect.
A) 10 fewer 
B) 15 more 
C) 25 fewer 
D) 50 more

Quizplus · Accepted Answer

The substitution effect suggests that as wages increase, leisure becomes more expensive in terms of opportunity cost, leading Keisha to work more hours.

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