In labor markets, a change in the wage rate has both an income and a substitution effect. An increase in wages causes an increase in real income but at the same time it increases the relative price of leisure for the worker. If an increase in wage rate causes an individual to work less, _____
a. the income effect dominates the substitution effect
b. the substitution effect dominates the income effect
c. the substitution and income effects cancel each other out
d. then leisure will be referred to as an inferior good
e. the increase in wage rates will cause an increase in the supply of labor
a
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Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes are superior to any other basketball shoes. Nike is attempting to
A) differentiate Air Jordan basketball shoes from other types of basketball shoes. B) convince consumers that Air Jordan basketball shoes are no different from other basketball shoes favored by celebrities. C) lower the marginal cost of producing Air Jordan basketball shoes. D) increase its profit by raising the price of Air Jordan basketball shoes.
In considering how to allocate its scarce resources among its various members, a household considers
a. each member's abilities. b. each member's efforts. c. each member's desires. d. All of the above are correct.