A columnist writing in the Wall Street Journal argues that because \"hourly wage

Question

A columnist writing in the Wall Street Journal argues that because "hourly wages in real terms" rose, the "price of time" also rose. Source: Brett Arends, "Spend Some Time, Save Some Money," Wall Street Journal, May 19, 2009 . What is the "price of time"? The price of time is O A. the supply of labor. O B. the marginal product of labor. O C. equal to infinity. OD equal to zero. O E. the wage. Is the columnist correct that when real hourly wages rise, the price of time increases? Briefly explain. The columnist is O A. incorrect because the marginal revenue product of labor eventually diminishes as a firm hires more workers. O B. correct because the wage is the opportunity cost of leisure. Ocincorrect because the quantity of labor demanded decreases when wages rise. O D. only correct if the substitution effect is larger in absolute value than the income effect. O E. incorrect because the labor supply curve may be backward bending.

Explanation / Answer

1). The price of time is the wage

2) the columnist is correct because when wage increasea the opportunity cost of leisure also increases which is the price of time or an hour.

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