In Labor Markets,a Change in the Wage Rate Has Both

question 129

Multiple Choice

In labor markets,a change in the wage rate has both an income and a substitution effect.An increase in wages causes an increase in real income but at the same time it increases the relative price of leisure for the worker.If the increase in the wage rate causes an individual to work less:

• A)the income effect will dominate the substitution effect.
• B)the substitution effect will dominate the income effect.
• C)the substitution and the income effects will cancel each other out.
• D)then leisure will be referred to as an inferior good.
• E)the increase in wage rates will cause an increase in the supply of labor.

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Definitions:

Pension Plans

Financial programs set up to provide income to individuals during retirement, usually funded by employers or the government.

Low-Dividend Policy

A strategy adopted by companies to retain more earnings by distributing lower dividends to shareholders, typically to reinvest in the company's growth.

Corporate Investors

Organizations that invest in other companies’ securities, often for strategic purposes beyond mere financial gain.

Low-Dividend Policy

A low-dividend policy is a corporate strategy where a company decides to retain a larger portion of earnings for reinvestment rather than distributing it to shareholders as dividends.