Ralph currently has two jobs. His primary job pays well, $20 per hour, but he ca

Question

Ralph currently has two jobs. His primary job pays well, $20 per hour, but he can work no more than 40 hours per week at it. In fact, he always chooses to work 40 hours at this job. His secondary job pays only $15 per hour, but he can work as few or as many hours as he wants. Currently he chooses to work 10 hours at his secondary job. For Ralph, leisure is a normal good. If the wage rate for his primary job increases to $22 per hour, will Ralph increase or decrease the number of hours he works in the secondary job?

Explanation / Answer

If the wage rate for his primary job increases to $22 per hour, Ralph will increase the number of hours he works in the secondary job as leisure will become relatively costly and as it is a normal good, Ralph will sustitute it with his secondary job.

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