Question

explain the income effect of change in wage rate.

Answer 1

Answer:

The income effect of higher wages means workers will reduce the amount of hours they work because they can maintain a target level of income through fewer hours. ... If you are lazy and prefer leisure, higher wages will enable you to work less. The income effect will soon dominate.

Answer 2

Answer:

The income effect of higher wages means workers will reduce the amount of hours they work because they can maintain a target level of income through fewer hours. If you are lazy and prefer leisure, higher wages will enable you to work less. The income effect will soon dominate.