For Which of the Following Workers Would the Substitution Effect

question 102

Multiple Choice

For which of the following workers would the substitution effect be more likely to outweigh the income effect of an increase in wage?

• A)air traffic controller 
• B)marketing manager 
• C)waitress 
• D)dentist

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Definitions:

Real Wages

Wages adjusted for inflation, representing the purchasing power of the income received from work.

Human Capital

The combined abilities, expertise, and non-physical assets of people that can be leveraged to generate economic worth.

Future Earnings

Refers to the projected income or profits that an individual, company, or asset is expected to generate in the future.

Minimum Wage

The lowest legal hourly pay that employers can offer to workers, set by government legislation to protect employees from unduly low compensation.