Author Question: If leisure is a normal good and the economy expands so that national income rises by 3 next year ... (Read 122 times)

123654777 · **on:** Jun 29, 2018

If leisure is a normal good and the economy expands so that national income rises by 3 next year then theoretically what ought to happen to the amount of work that should take place?

What will be an ideal response?

Question 2

A corporation is the type of business that has ________ government rules and regulations affecting it.

A) the fewest B) no C) only federal D) the most

itsakadoozi · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Theoretically the amount of work could either rise, fall or stay the same. As income rises in the country as a whole there are actually two effects that are taking place at the same time. The higher wages are making the opportunity cost of leisure more expensive which should induce people to work more. But the higher income allows workers to be able to afford more leisure. Unless we know which effect is stronger the income effect or the substitution effect there isn't any way to answer this question definitively by appealing to economic logic alone. It's largely an empirical question.

Answer to Question 2

D