Evaluating an Argument on Labor Choices
A student is analyzing historical economic data which shows that over a century, a country's average real wage rate increased significantly. Simultaneously, average daily free time increased from 16 hours to 19.5 hours, and average daily consumption rose from $38 to $105. The student argues: 'This makes no sense. A higher wage increases the opportunity cost of free time, so people should logically work more, not less, to take advantage of it.'
Critique the student's reasoning. In your evaluation, explain the economic mechanism that makes the observed outcome (more free time and more consumption) a rational choice.
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Economy
CORE Econ
Social Science
Empirical Science
Economics
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
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