Since income and substitution effects point in the same direction for normal goods, the leisure demand curve will be shallower if leisure is a normal good than if leisure is an inferior good.
Answer the following statement true (T) or false (F)
False
Rationale: While income and substitution effects point in the same direction for a normal good when the price of that good has changed and income is exogenous, this does not apply in the case of the leisure demand curve where the budget emerged endogenously from an endowment and an increase in the wage actually looks like a decrease in the price of consumption if the budget were viewed as exogenous.
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Refer to Table 2-19. What is Wilma's opportunity cost of making a bench?
A) 3 statues B) 1/2 of a bench C) 1.3 statues D) 1/3 of a statue
A sustained decrease in the price level is known as deflation
a. True b. False Indicate whether the statement is true or false
Suppose the MPC is .6 and consumption increases by $8 billion. Consequently, total income through the multiplier effect will:
a. $20 billion b. $8 billion c. $15 billion d. $13.3 billion
Suppose there are two economies, Alpha and Beta, which have the same production possibilities curves and are on the same point on each curve. If Beta then devotes more resources to investment goods than consumer goods when compared to Alpha, then in the future:
A. Beta will not be able to achieve full employment or productive efficiency B. Beta will experience greater economic growth than Alpha. C. Alpha will experience greater economic growth than Beta. D. Alpha will not be able to achieve full employment or productive efficiency.