Katie has 75 hours per week to allocate to leisure or work. She has a job that pays $30 per hour. she has $150 nonlabour income per week and the price of the (composite) consumption good is p=$1. Her preferences are given by UlC,L) = 1/2 C L. Katie's reservation wage is $ and she prefers to work hours per week. If Katie's nonlabour income rises to $210. she would prefer to work hours per week. If Katie's hourly wage was to rise to $40. she would prefer to work hours per week (with the original Yn=150). Considering the change in hours in response to the wage rise, the effect clearly dominates the effect