If your labor supply increases when you get a raise, which of the following is TRUE?
A) Your substitution effect is greater than your income effect.
B) Your substitution effect is less than your income effect.
C) Your substitution effect equals your income effect.
D) None of the above answers is correct.
A
You might also like to view...
Which of the following is NOT a normative economic statement?
A) States should reduce the tax on heating fuel oil during the winter. B) The price of gasoline is too high. C) People over the age of 75 should not be allowed to drive cars. D) Teenagers are responsible for most driving fatalities. E) We don't spend enough money on anti-smoking campaigns.
Out of a set of feasible alternatives, an optimizer should choose the alternative with the:
A) highest net benefit. B) highest opportunity cost. C) lowest total cost, regardless of benefit. D) highest total benefit, regardless of cost.