In the upward-sloping portion of the individual labor-supply curve, the substitution effect is
a. greater than the income effect.
b. less than the income effect.
c. equal to the income effect.
d. exactly offset by the income effect.
a
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When the U.S. economy hits a recession, fiscal policy automatically becomes:
A. expansionary because average tax rates go down and spending on welfare programs goes up. B. discretionary because the government is quick to react to changes in the business cycle. C. contractionary because average tax rates go up and spending on welfare programs goes down. D. contractionary because average tax rates go down and spending on welfare programs goes up.
Suppose a professor announces at the beginning of a course that he will give no failing grades because they are too damaging to self-esteem. How does such a policy affect equality and efficiency?
If the market price falls below a firm's minimum average total cost, the firm should:
A. consider how to minimize its losses. B. definitely stop production. C. pay only fixed costs. D. definitely continue to operate at a loss.
Spending on programs for which there is an existing legal obligation is labeled
A. entitlement spending. B. obligatory. C. discretionary. D. mandatory.