The Labor Supply Curve Will Be Positively Sloped If the Substitution

question 86

Multiple Choice

The labor supply curve will be positively sloped if the substitution effect of wages is

• A)Equal to the income effect of wages.
• B)Stronger than the income effect of wages.
• C)Weaker than the income effect of wages.

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Definitions:

Cross Elasticity of Demand

A measure of how the quantity demanded of one good responds to a change in price of another good, indicating the degree of substitutability between the two goods.

Complements

Goods or services that are used together, so that the consumption of one enhances the consumption of the other.

Substitutes

Products or services that can replace each other in satisfying a consumer's needs or wants.

Monthly Consumption

The total amount of goods and services that consumers purchase and use within a month.