ag econ Chapter 21 - wages are the price of leisure higher...

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Chapter 21 labor human input labor accounts for 75% of GNP Investments account for the other 25% service is a part of that account WILL SEE ON THE TEST A person’s decision to supply labor is simultaneously a decision to demand leisure. TAKE NOTE income effect higher wages increase a workers’ income, their demand for all goods and services go up, demand increases for leisure. substitution effect
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Unformatted text preview: wages are the price of leisure, higher wages cause a worker to want to work more and spend less time at leisure understand the backward bending labor supply curve Income effect>substitution effect demanding more leisure income effect = substitution effect income effect< substitution effect demand more work wage rate determined by skilled vs non skilled...
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