Assuming That Leisure Is a Normal Good, If an Individual's

question 252

Multiple Choice

Assuming that leisure is a normal good, if an individual's labor supply curve is upward sloping, then the

• A) income effect outweighs the substitution effect at higher wages.
• B) substitution effect outweighs the income effect at higher wages.
• C) income effect and the substitution effects are equal.
• D) income effect is zero.

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Definitions:

Coupon Payments

Periodic interest payments made to bondholders, typically on a semi-annual basis, based on the coupon rate of the bond.

Municipal

Relating to a city or town or its governing body.

Sinking Fund

A reserve fund established by a company to set aside revenue over time for the purpose of paying off debt or replacing a major asset in the future.

Bond Issue

The act of a borrower issuing bonds to raise money from investors willing to lend them money for a certain amount of time.