If One Worker Suppliers More Hours of Labor When Wage

question 27

Multiple Choice

If one worker suppliers more hours of labor when wage increases,we can conclude that ________.

• A) the substitution effect is greater than the income effect
• B) the income effect is greater than the substitution effect
• C) the income effect is the same as the substitution effect
• D) this worker is not efficient.

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Definitions:

CAPM

Capital Asset Pricing Model, a financial model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Marginal Price

This is the cost of producing one additional unit of a good or service.

Zero-Beta Security

A financial instrument whose returns are not correlated with those of the market, meaning it has a beta of zero, thus not contributing to portfolio volatility.

Expected Return

The probability-weighted average of the possible outcomes.