In: Economics
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.
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.