In terms of labour supply,the income effect of a higher wage causes a(n):
A) decrease in leisure time.
B) increase in the quantity of labour supplied.
C) decrease in the quantity of labour supplied.
D) reduction of leisure time to zero.

Question

Quizplus · Accepted Answer

The income effect of a higher wage means that individuals can maintain the same standard of living while working fewer hours, leading to a decrease in the quantity of labour supplied as they opt for more leisure time.

In Terms of Labour Supply,the Income Effect of a Higher