Question

In: Economics

If working in the paid labor market requires a commute, then Group of answer choices a)...

If working in the paid labor market requires a commute, then

Group of answer choices

a) the budget constraint shifts downward.

b) All of these answers are correct.

c) individuals with wres>w will work more hours in the labor market.

d) the substitution effect resulting from the commute dominates for workers participating in the labor market.

e) the budget constraint pivots to a lower effective wage.

Solutions

Expert Solution

Q. If working in the paid labor market requires a commute, then:

Ans) b) All of these answers are correct.

The budget constraint will shift downward resulting in a lower effective wage. The individuals with wage reservation > wage will work more hours in the labor market and substitution effect resulting from the commute usually dominates for workers participating in the labour market.


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