Barry's Wage Increased and He Responded by Working More Hours

question 35

Multiple Choice

Barry's wage increased and he responded by working more hours. Which of the following must be true?

• A) Leisure is an inferior good.
• B) The substitution effect of the wage increase dominated the income effect.
• C) The income effect of the wage increase dominated the substitution effect.
• D) The substitution and income effect both increased hours of work.

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Definitions:

Hourly Wages

Compensation paid based on the number of hours worked, typically calculated as a rate per hour.

Salaries

Regular payments made by employers to employees, typically on a monthly or biweekly basis, in exchange for the employees' work or services.

Compensation

Payment or reward given to someone in exchange for service or loss suffered, often related to employment or injury claims.

Bonuses

Additional compensation provided to employees as a reward for their performance, over and above their regular salary.