This signifies that the income effect of an increase in the wage is
always greater than the substitution effect.
greater than the substitution effect at very high wage rates.
an inducement to spend more.
always less than the substitution effect.
less than the substitution effect at very high wage rates.
2007-05-02 11:32:00 · 2 answers · asked by nidya 1 in Social Science ➔ Economics
You are right. If I get $50 an hour rather than $25 an hour, I need not work extra hours beyond 8 hours. If I was working on a full time job and a part time job, I may give up the part time job. After all I just do not want to work all the way without having time for enjoying family life when my per hour earning goes up very high.
2007-05-02 11:52:38 · answer #1 · answered by sensekonomikx 7 · 0⤊ 0⤋
greater than the substitution effect at very high wage rates.
2007-05-02 12:34:21 · answer #2 · answered by meg 7 · 0⤊ 0⤋