For the past year, Teddy has had a part-time job at which he is willing to work 30 hours each week. During Teddy's annual review, his boss grants him an 8 percent increase in his wage. As a result of the wage increase, Teddy is now willing to work 25 hours each week. Teddy's opportunity cost of has risen and because for Teddy the substitution effect of the wage hike is than the income effect.

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21-04-2020
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For the past year, Teddy has had a part-time job at which he is willing to work 30 hours each week. During Teddy's annual review, his boss grants him an 8 percent increase in his wage. As a result of the wage increase, Teddy is now willing to work 25 hours each week. Teddy's opportunity cost of has risen and because for Teddy the substitution effect of the wage hike is than the income effect.

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alizaybhatti43 alizaybhatti43 · Answer 1 · 2020-04-26T07:15:47+02:00

Answer:

Teddy's opportunity cost of leisure has risen and because for Teddy the substitution effect of the wage hike is greater than the income effect.

Explanation:

Wage rate is considered as the opportunity cost of leisure.

Along these lines, increment in wage rate infers an expansion in circumstance cost of recreation.

In the event that a laborer works progressively after pay increment, at that point replacement impact of compensation increment overwhelms or is more prominent than salary impact of pay increment and the other way around.