Question

The ______________ effect causes the individual to want to have more leisure and work less (supply less labor) because leisure is a normal good made affordable with higher income.

Answer 1

Income

Step-by-step explanation:

Income effect can be defined as the effect on the real income of a customer and hence on quantity of the goods in demand as the price of the commodity is changed.

Any increment or reduction in the price results in a consequent rise or reduction in the nominal income of the consumers and thus causes a high or low demand for other or same goods.

The rise or reduction in the income does not effect the demand of the inferior goods but if the income of the consumer is increased the demand to satisfy his leisure will also increase and hence the demand of such goods increases.