Fiona's hourly wage increases from $8 to $10. Which of the following describes a consequence of the increase in Fiona's wage?
A)The opportunity cost of Fiona's leisure time has decreased.
B)Fiona may choose to work fewer hours due to the increase in her wage.
C)If Fiona's labor supply curve is upward sloping, she will choose to work fewer hours.
D)Both a and b are correct.

Question

Quizplus · Accepted Answer

When Fiona's wage increases, the opportunity cost of her leisure time increases, not decreases. Therefore, she may choose to work fewer hours if she values her leisure time more with the higher wage.

Fiona's Hourly Wage Increases from $8 to $10