According to the Lucas Supply Function, Workers Who Experience a Positive

question 40

Multiple Choice

According to the Lucas supply function, workers who experience a positive price surprise will work more hours when

• A) there is no substitution effect from a positive price surprise.
• B) there is no income effect from a positive price surprise.
• C) the substitution effect dominates the income effect.
• D) the income effect dominates the substitution effect.

---

Definitions:

Adjacent Side

In a right-angled triangle, the side that is next to the angle in question, but is not the hypotenuse.

Opposite Side

In geometry, the side facing or diametrically opposed to a reference side in a shape or figure.

Inches

A unit of length measurement in the Imperial and United States customary systems, equivalent to 1/12th of a foot or 2.54 centimeters.

Hypotenuse

The side opposite the right angle in a right-angled triangle, which is also its longest side.