If Alberto Reyes increases his work hours when his real wage increases, then
A) the substitution effect of the wage increase outweighs the income effect.
B) the income effect of the wage increase outweighs the substitution effect.
C) leisure is an inferior good to Alberto.
D) the substitution effect of the wage increase is completely offset by the income effect.
A
You might also like to view...
Suppose our tastes are homothetic. It is often observed that people become more rigid --- more set in their ways --- as they get older. Can you translate this observation into "economics-speak" by discussing which feature of our tastes is likely the be changing as we get older?
What will be an ideal response?
Marginal revenue is defined as
a. total revenue divided by quantity b. total revenue minus total cost c. the change in total revenue divided by the change in quantity d. the change in total revenue divided by quantity e. the change in total revenue
When the economy slows down:
A. firms contract their operations. B. demand for workers decreases. C. GDP growth is slowing or negative. D. All of these are true.
If the Federal Reserve System wanted to tighten the money supply, the most powerful combination of actions would be to
a. raise reserve requirements, lower the discount rate, and buy government securities. b. raise reserve requirements, lower the discount rate, and sell securities. c. lower reserve requirements, raise the discount rate, and buy government securities. d. raise reserve requirement, raise the discount rate, and sell government securities.