Substitution Income
This is not fiction, it is a real example.
I teach in another online university that pays me the same compensation per course since year 2010. I have politely asked one month ago if the amount was going to be the same in year 2017. One hundred dollars in year 2010 are $ 114 today. The answer was that they are not thinking in “increasing” the salaries this year.
As the purchasing power of this compensation has declined, I have four alternatives:
1. Work more, for example increasing the numbers of hours dedicated to tutoring,
2. Buy less expensive goods (drink water instead of Tropicana Orange Juice).
3. Reduce the time I spent with the class (it means reduce the quality of teaching).
4. Quit in that university and look for another job.(in another university or in a private company).
Read about the income and substitution effects and give me your advice. Explain your answer.
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Office Hours: Substitution and Income Effect.
Minimum 150 words. This is a discussion question, not a paper. Cite all work.
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