Consider the Indifference Curve-Budget Line Model of Labor Supply,and Assume

question 57

Multiple Choice

Consider the indifference curve-budget line model of labor supply,and assume consumption and leisure are both normal goods.A higher wage rate would result in

• A) more consumption and less leisure.
• B) a reduction in the worker's marginal value of leisure.
• C) reduced consumption if the income effect is larger than the substitution effect.
• D) increased labor only if the substitution effect outweighs the income effect.

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