For Molly, the substitution effect of a wage increase is stronger than the income effect. In response to a wage increase, will Sally work more hours or will she work fewer hours?
In response to a wage increase, Sally will work more hours.
You might also like to view...
Which of the following groups has the highest proportion of unskilled illegal immigrants in the U.S.?
A. Agricultural workers B. Construction workers C. Cleaning workers D. Food preparers
What economic impact would the closing of a nearby military base have on a town? Would people and businesses that did not directly deal with the military personnel be affected?
What will be an ideal response?
Market activity differs from government activity because
a. markets generally force prices to below-cost levels b. governments never charge for the services they provide c. markets do not use voluntary exchange mechanisms d. markets provide a direct link between benefits and costs e. governments have strong incentives to keep costs under strict control
When the Fed buys a Treasury bill from the public, how does it usually pay for the T-bill?
a. by writing a check on a commercial bank account b. by printing new Federal Reserve notes c. by creating new reserves in bank accounts d. by prepaying taxes into the Treasury's account