Figure 14.1 A Consumer's Original Utility Maximizing Combination of Income and Leisure

question 11

Multiple Choice

Figure 14.1
A consumer's original utility maximizing combination of income and leisure is shown in the diagram above as point A. After a wage increase, the consumer's utility maximizing combination changes to point C.
-Refer to Figure 14.1. The substitution effect of the wage increase on the amount of hours of leisure is:

• A) L₁ to L₀
• B) L₁ to L₂.
• C) L₀ to L₂.
• D) L₀ to L₁.
• E) none of the above

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Definitions:

Store Loyalty

The likelihood of customers consistently choosing one particular store or brand over competitors, often resulting from positive shopping experiences or satisfaction with products.

Habitual Purchasers

Consumers who buy the same brands or products repeatedly out of habit rather than through active decision-making based on price, quality, or other factors.

Extended Problem-Solving

A consumer decision-making process used for high involvement purchases, requiring considerable time and effort in evaluating alternatives.

Reference Group

One or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors.