Refer to Figure 17-4. Which of the following is true if the wage rate increases from W0 to W1?
A) The supply curve is unit elastic.
B) The income effect and the substitution effect are equal.
C) The income effect is larger than the substitution effect.
D) The substitution effect is larger than the income effect.
D
Economics
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Lump sum taxes _____
a. are difficult to model theoretically but easy to apply b. have a small excess burden c. have no welfare cost d. require perfectly elastic demand curves
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A good that is rival in consumption and not excludable is called a
a. public good. b. common resource. c. club good. d. private good.
Economics