Business College

According to the substitution effect of labor supply, when the wage rate goes up: Group of answer choices it becomes more costly to consume leisure, so people will work more. it becomes less costly to consume leisure, so people will work more. the opportunity cost of enjoying leisure goes down. firms will hire more workers since people are more willing to work.

Answers

Answer 1
It becomes more costly to consume leisure—i.e., when wages rise, the cost of not working to earn those higher wages also rises.
Answer 2

According to the substitution effect of labor, firms would hire more workers because people are more willing to work more.

The substitution effect of labor tells us that as income is raised, people would be more willing to give up leisure hours to work more.

This is due to the fact that they would earn more money for the extra hours that they would have spent on leisure.

There would be more willingness to work and the firms would have more people to hire.

Read more on the substitution effect here:

https://brainly.com/question/1319399

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