Asked by
Dominique Likus
on Nov 16, 2024
Verified
The substitution effect in the work-leisure model induces a person to work less in response to higher wages, which tends to make the labor-supply curve slope upward.
Substitution Effect
The economic principle that as prices rise or incomes decrease, consumers will replace more expensive items with less costly alternatives.
- Familiarize oneself with the connection between wage fluctuations and the determination of labor supply in the work-leisure model.
Verified Answer
AG
Learning Objectives
- Familiarize oneself with the connection between wage fluctuations and the determination of labor supply in the work-leisure model.
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