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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 per hour to $20 per hour, Keisha will work _____ hours because of the income 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 per hour to $20 per hour, Keisha will work _____ hours because of the income effect.
A) 10 fewer 
B) 15 more 
C) 25 fewer 
D) 50 more

Quizplus · Accepted Answer

As Keisha's wage increases, the income effect suggests she may choose to work fewer hours because she can maintain the same income level with less work, allowing more time for leisure.

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