Suppose the market wage for cashiers increases from $7 per hour to $9 per hour. As a result, Pat, who is a cashier, now works five more hours per week. On the other hand Chris, who is also a cashier, now works five fewer hours per week. Pat's behavior illustrates the ________ effect of a wage increase.
A. substitution
B. income
C. demand
D. supply
Answer: A
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All of the following explain the impact lag except the time between
A) a change in the money supply and a change in interest rates. B) a change in interest rates and a change in investment. C) a change in investment and the change in GDP. D) a change in the economy and the use of a tool of monetary policy.
Without restrictions, the market supply curve is horizontal at P = 5, and the inverse demand curve for taxi cab rides is P = 20 - Q in a competitive market. Subsequently, only 10 taxi cabs are allowed in the market
This results in a deadweight loss of A) 0. B) 5.5. C) 12.5. D) 25.
Suppose that the supply curve remains unchanged. If the demand curve shifts to the right
A) the market clearing price definitely will decrease. B) the market clearing price definitely will increase. C) there will be no change in the market clearing price. D) the market will collapse.
When John earned $65,000 he purchased 10 DVDs a year. His income has just increased to $68,000 and he plans to purchase 15 DVDs this year. John's income elasticity of demand equals
A) 0. B) 0.11. C) 1.67. D) 8.87.