Case Study

Analyzing a Change in Work Hours

A wage increase creates two opposing effects on an individual's decision about how much free time to take. One effect, resulting from higher overall income, tends to increase the demand for free time. The other effect, resulting from a higher opportunity cost for each hour of free time, tends to decrease the demand for free time. Given the scenario below, analyze which of these two effects had a greater influence on the individual's choice.

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Updated 2025-08-20

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