Suppose that Barry's wage increases and he responds by working more hours. Which statement must be TRUE?
A) Leisure became more expensive, so Barry consumed less of it.
B) The substitution effect of the wage increase caused Barry to substitute leisure for work.
C) The income effect of the wage increase dominated the substitution effect of the wage increase.
D) The substitution effect increased hours of work and the income effect increased hours of work.

Question

Quizplus · Accepted Answer

When Barry's wage increases, leisure becomes more expensive in terms of opportunity cost, leading him to consume less leisure and work more hours.

Suppose That Barry's Wage Increases and He Responds by Working