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

Question

Quizplus · Accepted Answer

The substitution effect of a higher wage makes work more attractive compared to leisure, leading individuals to substitute work for leisure, thus increasing the quantity of labor supplied.

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