Explain the income effect and the substitution effect due to an increase in the wage rate
What will be an ideal response?
An increase in income will lead to a higher demand for leisure. However, an increase in the wage rate will also make leisure more expensive. Since these two effects are moving in opposite directions of one another theory alone cannot tell us the net effect without knowing the absolute change of the income and substitution effects.
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The shorter the "pass-through" period, the ________ the desirable BOT effects of devaluation on quantities traded will appear
A) sooner B) longer C) bigger D) smaller
Which two lines on a cost curve diagram intersect at the shutdown point?
a. Average variable cost and marginal revenue b. Marginal revenue and total cost c. Average variable cost and total cost d. Marginal revenue and marginal loss
Which of the following statements would come from someone classified as unemployed?
A. I'm not working. I had three interviews this week, and I'm trying to find a job. B. I haven't had a job in a year, and I stopped looking for a job nine months ago. C. I'm a full-time student at the University of Illinois who doesn't have time to work. D. I can't stand my current job as a telemarketer. I used to be a nuclear engineer.
Consider the market for chicken. Assuming that chicken and beef are substitutes, an increase in the price of beef will:
A. decrease the demand for chicken creating a lower price and a smaller amount of chicken purchased in the market. B. decrease the supply of chicken creating a lower price and a smaller amount of chicken purchased in the market. C. increase the demand for chicken creating a higher price and a greater amount of chicken purchased in the market. D. increase the supply of chicken creating a lower price and a greater amount of chicken purchased in the market.