The Income Effect Means That at a High Enough Wage

question 84

Multiple Choice

The income effect means that at a high enough wage rate the labour supply curve has a

• A) positive slope because an increase in the wage rate increases income.
• B) negative slope because an increase in income increases the demand for leisure.
• C) negative slope because an increase in the wage rate increases hours worked to earn more income.
• D) positive slope because an increase in income increases the demand for leisure.

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