Assume that Stan just received a promotion and raise.In terms of labour supply,the substitution effect of a higher wage will lead him to:
A) supply fewer hours of labour.
B) supply more hours of labour.
C) substitute leisure for work.
D) reduce work time to zero.

Question

Quizplus · Accepted Answer

The substitution effect of a higher wage means that Stan can now earn more per hour worked, which makes working more attractive. As a result, he will choose to supply more hours of labour, as he will earn more money for the same amount of work.

Assume That Stan Just Received a Promotion and Raise