Suppose that an individual has chosen not to work. Then a change in the wage rate:
A. creates a substitution effect, but no income effect.
B. creates an income effect, but no substitution effect.
C. creates both and income and substitution effect.
D. creates neither an income effect nor a substitution effect.
A. creates a substitution effect, but no income effect.
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What will be an ideal response?
Consider a demand curve that has a constant elasticity value of 0. What happens to quantity demanded and total revenue when price increases?
A) The quantity demanded does not change but total revenue decreases. B) The quantity demanded and total revenue fall to zero. C) The quantity demanded and total revenue remain the same. D) The quantity demanded does not change but total revenue increases.