Asked by Marwa Hajay on May 21, 2024

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If a person has no nonlabor income, a decrease in wages causes the budget line between leisure and other goods to shift downward in a parallel fashion.

Nonlabor Income

Income received from sources other than employment or the active exertion of effort, such as dividends, interest, or rental income.

Leisure

Time free from work or duties, which can be used for rest, recreation, or other personal activities.

Parallel Fashion

A manner in which activities or processes occur simultaneously or in a coordinated manner, often leading to increased efficiency or synchronization.

  • Evaluate the effects of wage changes on labor-leisure choices and the backward-bending labor supply.
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Verified Answer

JB
Jeetendra BhandariMay 28, 2024
Final Answer :
False
Explanation :
A decrease in wages causes the budget line to pivot inward, not shift downward in a parallel fashion, because the slope of the budget line, which represents the trade-off between leisure and consumption, changes with the wage rate.