With Respect to Labor Supply, the Substitution Effect Takes Account

question 91

Multiple Choice

With respect to labor supply, the substitution effect takes account of the point that at higher wage rates

• A) a person can afford to take more leisure.
• B) leisure has become less expensive and so a person consumes less leisure.
• C) there are no factors inducing a person to work less.
• D) leisure has become more expensive and so a person consumes less leisure.

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Definitions:

Cognitive Dissonance

The mental discomfort experienced by a person who holds two or more contradictory beliefs, ideas, or values.

Displacement

A defense mechanism where negative feelings or impulses are redirected from the original object to a more acceptable or safer target.

Overextension

A linguistic error, common in early language development, where a child applies a word in a broader context than is appropriate.

Functional Fixedness

The tendency to view an object in terms of its name or familiar usage.