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As a general rule, is it safe to assume that a higher wage will encourage significantly more hours worked for all individuals? Explain.
Therefore, if substitution effect is more effective than income effect then people will work morebecause of wage increase, and if frosstitution effect is less effective than income effect thenpeople will workless.
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Chapter 6
Consumer Choices
Introduction
How Markets Work
Markets and Welfare
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everyone. Today we're answering problem number 18 on chapter six of the textbook, which asks, as a general rule, is it safe to assume that a higher wage will encourage significantly more hours worked for all individuals? Explain their answer. So I'll just give you the answer right now. No, it is not a general rule. You cannot have seen that I hire Lee to encourage significantly more hours worked for all individuals. Now why is this? While let's consider our leisure raver model, which graphically represents the balance struck between hours of leisure versus ours front working. Excuse me. Now let's say in the leisure labor model, we're going to increase wage as they do this problem. Well, logically, you would think All right. Yes, it is safe to assume that the increase in wages will encourage more about Laker, however, at a certain point, and this is the rationale for wide and not the scene. Any higher rate will automatically encourage significantly more hours work for all individuals because at a certain point people will make so much money they make so much money from higher wages, which obviously would increase their labor, but not to the force because they make so much money that they would just choose to work, Lex. And remember, it's up to their personal preference. What happens? They're probably gonna make some sort of combination between both user and flavor. And that combination is why we cannot assume that an increase in age will cost significantly more hours for or we'll choose to stop or century. They'll choose more leisure, more hours. And the strike that that woods, as we all need to do in our life with anything like the balance and things, things in moderation. So that is why I know as a general rule, it is not safe to assume that a higher wage will encourage significantly more hours worked for all individuals. And there you have it. Good job, guys. I hope you're all enjoying my video. Please. The lifeline next to it if you did. And have a nice day.
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