Your Boss Has Told You That You Will Receive an Increase

question 17

Multiple Choice

Your boss has told you that you will receive an increase in your salary next year.In response to this news,you would reduce your labour supply because

• A)the income effect would be equal to the substitution effect.
• B)the substitution effect would be stronger than the income effect.
• C)there would be an income effect but no substitution effect.
• D)there would be a substitution effect,but no income effect.

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Definitions:

Understanding Conservation

The cognitive ability to recognize that quantity or amount does not change when its form or appearance is altered.

Cognitive Development

The process by which an individual's ability to think, understand, and interact with the world evolves throughout life.

Object Permanence

The understanding that objects continue to exist even when they cannot be seen, heard, or otherwise sensed, a concept crucial in the cognitive development of infants.

Formal Operational

A stage in Piaget's theory of cognitive development, marked by the ability to think abstractly, reason logically, and plan systematically.