A single woman with a young child works in the labor force. She earns a wage of $15 per hour and...

Question:

A single woman with a young child works in the labor force. She earns a wage of $15 per hour and has to pay $5 per hour in day-care costs for each hour she works. The price of day-care then increases to $8 per hour. How would you predict that this change will affect the number of hours she works?

Labor Decisions:

Labor decisions are unique in that there exists a trade-off between hours worked and leisure. Therefore, income is only one factor that a worker considers when deciding how many hours to work and what job to take.

Answer and Explanation: 1

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It is hard to say without knowing her preferences but there are two effects here. The first is that the opportunity cost of working has increased...

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Labor Market: Definition & Theory

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Chapter 3 / Lesson 41
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Learn the labor market definition and what happens in the labor market. See what the split labor market theory is and learn the different types of labor market.


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