If Chad's Labor-Supply Curve Is Upward-Sloping, Then, for Chad

question 334

Multiple Choice

If Chad's labor-supply curve is upward-sloping, then, for Chad,

• A)an increase in the wage creates an income effect that is greater than the substitution effect.
• B)an increase in the wage creates a substitution effect that is greater than the income effect.
• C)leisure and consumption are perfect substitutes.
• D)leisure and consumption are perfect complements.

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Definitions:

Capitalism

An economic system characterized by private or corporate ownership of capital goods, by investments determined by private decision, and by prices, production, and the distribution of goods determined mainly by competition in a free market.

Command Economy

An economic system where key economic decisions, such as allocation and distribution of resources, are made by the government.

Production

The process of creating, manufacturing, or producing goods and services.

Distribution

The process of making a product or service available for use or consumption by a consumer or business user.