2007-04-24 17:45:15 · 2 answers · asked by kanwal_gne 1 in Social Science ➔ Economics
For any good which you sell for income and also like to consume you will increase consumption of the good when the price gets high enough. This is true if you are an apple farmer selling apples, a skilled craftsman selling your wares, or just selling your time for wages. As the price (wage) increases your income increases you will spend more money on all your preferred goods (income effect). However the as the price of your good (time) increases the substitution effect will cause you to buy less. When the income effect becomes bigger than the substitution effect you will decrease the time you devote to work. The point at which this happens will depend on how strong your preference is for leisure vs work as well as how much you value the things money can buy.
2007-04-24 20:38:15 · answer #1 · answered by meg 7 · 0⤊ 0⤋
if your hourly pay gets high enough, you actually start working less because you want some free time to enjoy all that money that you earn.
scientific explanation is that as you get more money, marginal value of free time is increasing, and marginal value of money is decreasing.
2007-04-25 02:53:01 · answer #2 · answered by Anonymous · 0⤊ 0⤋