Which of the following hypotheses is consistent with fewer hours worked per year in Europe than in Canada?
A)fewer mandated holidays in Europe than in Canada
B)higher employment-to-population ratios in Europe than in Canada
C)higher tax rates in Europe than in Canada
D)a smaller underground economy in Europe than in Canada

Question

Quizplus · Accepted Answer

Higher tax rates in Europe can lead to a substitution effect where individuals prefer leisure over labor, resulting in fewer hours worked.

Which of the Following Hypotheses Is Consistent with Fewer Hours