Which of the Following Statements Is Correct

question 324

Multiple Choice

Which of the following statements is correct?

• A) When the real wage increases, the labor supply curve shifts rightward.
• B) When the real wage increases, the labor supply curve shifts leftward.
• C) When the real wage decreases, the labor supply curve shifts leftward.
• D) None of the above statements are correct.

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Definitions:

Complementary Good

A complementary good is a product or service that adds value to another product or service when both are used together, leading to an increase in demand for one when the price of the other decreases.

Inferior Good

An inferior good is one where demand decreases as the income of the consumer increases, opposed to a normal good where demand increases with an increase in income.

Price Elasticity

A determination of how price fluctuations affect the demand level for a good.

Demand Coefficient

A numerical measure of the sensitivity of demand for a good or service to a change in one of its determinants, such as price, income, or the price of related goods.