Assume Leisure Is an Inferior Good Instead of a Normal

question 150

Multiple Choice

Assume leisure is an inferior good instead of a normal good. The income effect of a wage increase will lead to a ________ demand for leisure and a ________ labor supply.

• A) higher; higher
• B) higher; lower
• C) lower; higher
• D) lower; lower

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Definitions:

Gross Profit

The difference between revenue and the cost of goods sold before deduction of overheads, payroll, taxation, and interest payments.

Price-Earnings Ratio

The price-earnings ratio (P/E ratio) is a valuation ratio of a company's current share price compared to its per-share earnings.

Market Price

The present trading value for assets or services within the scope of a commercial market.

Shares Of Stock

Units of ownership interest in a corporation or financial asset, giving shareholders a proportion of the corporation's assets and profits.