1486EconomicsMedium
Assuming leisure is a normal good, if the income effect is greater than the substitution effect a wage increase?
Awill have no effect on labour supply
Bwill increase labour supply.
Ccould cause either an increases or a decrease in labour supply
Dwill decreases labour supply
Correct answer
D. will decreases labour supply
Explanation
The correct answer is will decreases labour supply.