If the Wealth Effect of an Increase in the Real

question 46

Multiple Choice

If the wealth effect of an increase in the real wage was greater than the substitution effect of an increase in the real wage

• A)the labor supply curve would slope upward.
• B)the labor supply curve would slope downward.
• C)the labor supply curve would be vertical.
• D)the labor demand curve would solely determine the real wage.

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Definitions:

Equilibrium Price

The price at which the quantity of a product offered is equal to the quantity of the product demanded, creating a balance without excess supply or demand.

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the equilibrium price, where market supply and demand are balanced.

Pepsi

A carbonated soft drink manufactured by PepsiCo, considered one of the most recognizable beverage brands worldwide.

Coke

A carbonated soft drink that has become a globally recognized brand, or alternatively, a fuel derived from coal.