In a model of consumption and leisure, a drop in the wage will cause workers to work less if tastes are quasilinear in leisure.

Answer the following statement true (T) or false (F)

True

Rationale:

The substitution effect points in the direction of more leisure (i.e. less work), and the wealth effect is zero on the leisure axis.

Economics

You might also like to view...

Which firm is not dealing with adverse selection

a. a manufacturer requires a 90 day probationary period for new employees b. a temporary clerical agency requires a typing test c. a manufacturer requires suppliers to be ISO 9000 certified d. Smokers get the same life insurance rates as non-smokers

Economics

Markets for pollution rights

a. have never been tried in the United States b. assign property rights to those who value them least c. allow the government to assign property rights d. enable those who value them most to pollute e. are less efficient than pollution standards

Economics