Imagine that the cost of the living raises, thereby decreasing the purchasing power of your income. If your money wage doesn’t rise, you might work more hours due to this cost-of-living raise. Is this response principally an income effect or the substitution effect? In brief discuss.
Imagine that two jobs are exactly the same except that one is carried out in an air-conditioned workplace. How could you assess the value workers attach to such a job amenity?