For a Worker Who Is Deciding How Many Hours of Labour

question 24

Multiple Choice

For a worker who is deciding how many hours of labour to supply, all of the following are true except that:

• A) The marginal rate of substitution between income and leisure is equal to the wage rate.
• B) The income effect of a wage change equals the substitution effect.
• C) The rate at which she is willing to exchange leisure for income equals the rate at which the market allows her to do it.
• D) The worker cannot increase total utility by working more or fewer hours.
• E) The slope of the budget line equals the slope of the indifference curve.

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