If the Substitution Effect from a Higher Wage Rate Exceeds

question 77

Multiple Choice

If the substitution effect from a higher wage rate exceeds the income effect, then a higher wage rate

• A) decreases the quantity of labour supplied.
• B) shifts the supply of labour curve leftward.
• C) shifts the supply of labour curve rightward.
• D) increases the quantity of labour supplied.

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Definitions:

Preferred Shares

A class of ownership in a corporation that has a higher claim on its assets and earnings than common shares, usually with fixed dividends.

Insolvent

A financial state in which an individual or entity can no longer meet their monetary debts as they come due.

Participating Preferred Stock

A type of preferred stock that provides its holders with dividends that exceed the stated dividend rate in certain situations, often when the company performs well.

Statutory Ratification

The process by which a legislative body formally approves an action, treaty, or agreement previously enacted or signed.