A freelance software developer's average hourly rate decreases due to increased market competition. In response, the developer decides to reduce their weekly paid work hours from 40 to 25, choosing to spend more time on personal, unpaid coding projects. Which of the following best explains the developer's decision to work fewer hours?

Impact of Overtime Tax on Labor Supply

Analyzing Labor Supply Decisions

If a worker's hourly wage is cut, and they respond by increasing the number of hours they work, it can be concluded that for this worker, the incentive to make up for lost earnings is weaker than the incentive to substitute work time for now-cheaper leisure time.

Analyzing a Gig Worker's Labor Decision

For each scenario describing a worker's response to a decrease in their effective hourly wage, match it with the underlying economic principle that best explains their decision.

A freelance graphic designer's hourly rate falls due to new competition. In response, she reduces her weekly work hours to spend more time on personal art projects. This decision implies that for her, the ____ effect of the wage change was stronger than the income effect.

Analyzing the Impact of a Benefit Change on Work Hours

A government implements a new welfare policy that, for a specific group of part-time workers, effectively lowers their net hourly earnings for any hours worked beyond a certain threshold. Contrary to the policy's intent to encourage more work, many individuals in this group reduce their work hours. Which statement best analyzes this observed behavior from an economic perspective?

A salaried employee is informed that due to budget cuts, their annual bonus will be eliminated, which effectively lowers their average hourly compensation. In response, the employee reduces the amount of unpaid overtime they typically work. Arrange the following statements to logically explain the economic reasoning behind the employee's decision to work fewer hours.