When wages increase, the income effect ________ the supply of labor and the substitution effect ________ the supply of labor.
A. decreases; increases
B. increases; decreases
C. increases; increases
D. decreases; decreases
Answer: A
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Refer to Figure 2-5. If the economy is currently producing at point W, what is the opportunity cost of moving to point Y?
A) 2 million tons of paper B) 14 million tons of steel C) 9 million tons of paper D) 2 million tons of steel
Roaring Lion Studios can produce DVDs at a constant marginal cost of $5 per disk, and the studio has just releasing the DVD for its latest hit film, Ernest Goes to the Hamptons
The retail price of the DVD is $25, and the elasticity of demand for this film is -2. Has the studio selected the profit-maximizing retail price for this DVD? A) Yes B) No, the retail price is too low C) No, the retail price is too high D) We do not have enough information to answer this question.
A person quits her job in order to spend time looking for a better paying job. This is an example of
A) frictional unemployment. B) cyclical unemployment. C) seasonal unemployment. D) structural unemployment.
The richest 10 percent of U.S. houses hold more than two-thirds of all wealth. The problem with this statement is that
A) it does not consider an individual's current income. B) it does not consider private and public pension plans. C) it is based entirely on nonhuman wealth. D) it is based entirely on human wealth.