Lakisha's Labor Supply Curve Is Downward Sloping for Wage Rates

question 125

Multiple Choice

Lakisha's labor supply curve is downward sloping for wage rates greater than $40 per hour and upward sloping for wage rates less than $40 per hour.If leisure is a normal good for Lakisha, then:

• A)if the wage is greater than $40, the substitution effect of a wage increase is greater than the income effect.
• B)if the wage is $18, the substitution effect of a wage increase is less than the income effect.
• C)if the wage is greater than $40, the substitution effect of a wage increase is less than the income effect.
• D)if the wage is greater than $20, the substitution effect of a wage increase is less than the income effect.

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