According to the income effect, an increase in the wage rate will lead the worker to
A. work more hours and leisure more hours.
B. work more hours if leisure is a normal good.
C. work fewer hours if leisure is a normal good.
D. not change hours worked.
E. work fewer hours if leisure is an inferior good.
Answer: C
You might also like to view...
What problems arise from the CPI bias?
What will be an ideal response?
Proper inflation accounting is necessary to measure the size of the real deficit because
a. as a lender, the government gains from inflation. b. otherwise, the deficit is understated in inflationary times. c. the government is a borrower that pays back dollars of less real value in inflationary times. d. interest payments tend to fall in inflationary times.
In the long run a company that produces and sells laundry detergent incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units. For this range of output, the laundry detergent company exhibits
a. economies of scale. b. constant returns to scale. c. diseconomies of scale. d. efficient scale.
Milton Friedman argued that the Fed's control over the money supply could be used to peg
a. the level or growth rate of a nominal variable, but not the level or growth rate of a real variable. b. the level of a nominal or real variable, but not the growth rate of a real or nominal variable. c. the level or growth rate of a real variable, but not the level or growth rate of a nominal variable. d. both levels and growth rates of both real and nominal variables.