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

question 119

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 income effect of the wage increase on the amount of hours of leisure is:

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

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Definitions:

Forced Inspiration

The process of taking air into the lungs with the use of accessory respiratory muscles, in addition to the primary muscles, usually under conditions of high demand or respiratory distress.

Pectoralis Minor

A thin, triangular muscle located beneath the pectoralis major, involved in movements of the shoulder and chest.

Pulmonary Ventilation

Pulmonary ventilation is the process of moving air in and out of the lungs to facilitate gas exchange with the internal environment, primarily involving oxygen and carbon dioxide.

Gas Exchange

The process by which oxygen is taken in from the environment and carbon dioxide is released as a waste product, primarily occurring in the lungs in humans.