Households Increase the Quantity of Labour Supplied When

question 1

Multiple Choice

Households increase the quantity of labour supplied when

• A)the real wage rate rises because the opportunity cost of not working rises.
• B)the real wage rate rises because the opportunity cost of not working falls.
• C)income tax rises because an increase in income tax increases the demand for labour.
• D)the nominal wage rate falls because the opportunity cost of not working rises.
• E)the nominal wage rate rises because the real wage rate must also rise.

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Definitions:

Opportunity Cost

Passing up on potential profits from a range of choices when one selection is made.

Decision-making Process

A series of steps taken by an individual or organization to determine the best action to achieve a particular goal.

Efficient Markets

Financial markets where prices fully reflect all available information.

Marginalism

The process of analyzing the additional or incremental costs or benefits arising from a choice or decision.