As a Person's Wage Rate Increases, the Substitution Effect Motivates

question 283

True/False

As a person's wage rate increases, the substitution effect motivates an increase in work and the income effect motivates a decrease in work.

---

Definitions:

Selling Expenses

Costs associated with the selling of a company's goods or services, not including the cost of producing the goods.

Nonoperating Items

Revenue and expenses arising from activities outside of a company's normal business operations, such as investing or financing activities.

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue.

Operating Expenses

Costs related to the day-to-day functions of a business, excluding the cost of goods sold.