Now let’s do the same with shifts in Joe’s labor supply from Figure 18.2. We listed five important supply shifters in Chapter 3. For each example state whether you think Joe’s labor supply will tend to increase or decrease as a result of the change, and state which of the five factors seem to cause the supply shift.
a. The government raises Joe’s income tax rate, so now he pays 20% of his wages to the government instead of the old 10%.
b. The price of comfortable work shoes falls dramatically. Now, his feet won’t ache nearly as much after a full day of work.
c. While in Las Vegas for the weekend, Joe wins a $1 million jackpot.