Which of the Following Statements Regarding Labor Supply Is False

question 145

Multiple Choice

Which of the following statements regarding labor supply is false?

• A)Jerry's labor supply curve can bend backward if the income effect of a higher wage rate outweighs the substitution effect.
• B)Bob's labor supply curve will not bend backward if the wage rate is never so high that the income effect outweighs the substitution effect.
• C)If there is a wage rate above which the income effect is at least as great as the substitution effect, the labor supply curve will be vertical or bend backward.
• D)The labor supply curve will slope upward if the income effect dominates the substitution effect.
• E)Hayden's offer to work more hours as the result of a wage increase suggests that the substitution effect dominates the income effect.

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Definitions:

Unit Product Cost

The total cost associated with producing a single unit of product, including direct materials, direct labor, and allocated overhead.

Absorption Costing

An accounting method that includes all manufacturing costs (direct labor, direct materials, and both variable and fixed manufacturing overhead) in the cost of a product.

Unit Product Cost

The total cost (both fixed and variable) incurred to produce, store, and sell one unit of a product.

Variable Costing

An accounting method that only considers variable costs for product costing, excluding fixed overheads.