Question

Reducing the fixed monetary costs associated with working may:

A) cause an individual to work less.

B) cause an individual to work more.

C) increase the likelihood an individual will participate in the labor force

D) lead to either A) or C)

The solution should be D. BUT I am wondering what if the problem is asking about Increasing the fixed monetary costs associated with working may?

What should be the answer?

Answer 1

Work large number of hours to cover the large costs of entering the labor force or stay away as there is no money to enter into the labor force.

It is the same way around, fewer costs more workers will enter but work for fewer hours as the breakeven of the costs and benefits will be matched within less hour of work and then some earning for livelihood but as the costs increase workers capacity to enter the labor force decreases and some of those entered need to work more number of hours to earn in proportional to the costs.