Figure 14.2 A Consumer's Original Utility Maximizing Combination of Income and Leisure

question 6

Multiple Choice

Figure 14.2
A consumer's original utility maximizing combination of income and leisure is shown in the diagram above as point A. After a wage decrease, the consumer's utility maximizing combination changes to point C.
-Refer to Figure 14.2. The substitution effect of the wage decrease on the amount of hours of leisure is:

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

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Definitions:

Meeting

A gathering of two or more people for the purpose of discussing and/or acting upon matters of common interest.

Incorporators

Individuals involved in the formation of a corporation who sign its articles of incorporation and may become initial shareholders.

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Legal documents filed with a state government to officially form a corporation, outlining its structure and purpose.

Appoint

To assign a job or role to someone.