Megan Took a Pay Cut from $10 an Hour to $7

question 117

Multiple Choice

Megan took a pay cut from $10 an hour to $7 an hour. As a result of the wage decrease, Megan desires to work less hours and take more hours of leisure. For Megan

• A) the substitution effect dominates the income effect.
• B) the income effect dominates the substitution effect.
• C) the substitution effect must equal the income effect.
• D) the substitution effect must be zero.

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Definitions:

Acts of Commission

Actions that are deliberately undertaken, which can have intended or unintended consequences.

Construct Confounding

Refers to the situation in an experiment or study where the effects of two variables cannot be distinguished from each other.

Counselor Bias

Preconceived notions or prejudices held by a counselor that might affect their professional judgment or interactions with clients.

Treatment Sensitive

Describes conditions or subjects that exhibit detectable or significant changes in response to interventions or treatments.