In the work-leisure model, suppose consumption and leisure are both normal goods. The income effect of a wage increase results in the worker choosing to
A)work less than before.
B)work more than before.
C)possibly work more or less than before.
D)work more with a higher level of consumption.

Question

Quizplus · Accepted Answer

When both consumption and leisure are normal goods, an increase in wages increases the worker's income, leading to a preference for more leisure (since leisure is a normal good), thus resulting in working less.

In the Work-Leisure Model, Suppose Consumption and Leisure Are Both