Explain how an increase in the public’s taste towards less leisure wou

Explain how an increase in the public’s taste towards less leisure would affect the labor market, the production function, and aggregate output. Provide graphs to illustrate.

What will be an ideal response?

ANSWER

An decrease in the demand for leisure would shift the labor supply curve to the right (up), which would decrease the real wage and increase the quantity of labor. This increase in the quantity of labor would lead to a movement along the production function towards higher output.