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

question 4

Multiple Choice

Assuming that leisure is a normal good, if an individual's labor supply curve is backward bending, 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:

Exposure Therapy

A psychological treatment method that involves confronting fears directly and in a controlled manner to reduce the fear response over time.

Dread

An intense fear or apprehension about something that is about to happen or that might happen.

Subsides

Decrease in intensity or severity; often used to describe the diminishing of symptoms or conditions over time.

Self-actualize

The attainment and utilisation of one's skills and possibilities, viewed as an innate motivation or requirement existing in every person.