The Substitution Effect of a Decrease in the Wage Rate

question 136

Multiple Choice

The substitution effect of a decrease in the wage rate causes the quantity of labor supplied to

• A)increase
• B)increase only if the individual desires more leisure time
• C)increase only if the substitution effect outweighs the income effect
• D)decrease
• E)decrease only if the individual lowers the value of leisure time

---

Definitions:

Oxygen

A chemical element vital for most forms of life on Earth, used in respiration and medical therapies.

Carbon Dioxide

A gas found in the air, exhaled by all animals; the chemical formula is CO2.

Phenylketonuria

A genetic disorder resulting from the body’s failure to oxidize an amino acid, perhaps because of a defective enzyme.

Phenylalanine

An amino acid of a protein.