Karina is able to select her weekly work hours. When a new busway route opens up and starts to operate immediately, it cuts one hour off Karina’s total daily commute to work. If both leisure and income are normal goods, what is the effect of the shorter commute on Karina’s work time? Hint: Draw the budget constraint before and after new busway route opens up and explain what happen. You may set up Karina’s initial condition hypothetically. Following, describe about substitution and income effect.

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