Ask Question
24 October, 09:41

If Jeff's wage rate rises, he decides to work more hours. From this, we can infer thatfor Jeff, the substitution effect is greater than the income effect. for Jeff, the substitution effect is less than the income effect. for Jeff, the substitution effect is equal to the income effect. Jeff is confused.

+2
Answers (1)
  1. 24 October, 10:09
    0
    Answer:Substitution effect is greater than Income Effect

    Explanation:

    When there is increase in supply of labor as the wage rate increases then substitution effect dominates over Income effect.

    on the other hand, When supply of labor decreases as the wage rate increases then income effect is stronger than substitution effect.

    Here in this case with the increase in wage rate there is an increase in working hours. Therefore Substitution effect is greater than Income Effect
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “If Jeff's wage rate rises, he decides to work more hours. From this, we can infer thatfor Jeff, the substitution effect is greater than the ...” in 📗 Social Studies if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers