With Respect to Labor Supply, the Substitution Effect Takes Account

question 91

Multiple Choice

With respect to labor supply, the substitution effect takes account of the point that at higher wage rates

• A) a person can afford to take more leisure.
• B) leisure has become less expensive and so a person consumes less leisure.
• C) there are no factors inducing a person to work less.
• D) leisure has become more expensive and so a person consumes less leisure.

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Definitions:

Compulsion

A strong, usually irresistible impulse to perform an act, especially one that is irrational or contrary to one's will.

Obsession

A persistent, unwanted, and intrusive thought or urge that causes significant anxiety or distress.

Phobia

An extreme or irrational fear or aversion to a particular object, situation, or activity, significantly impacting an individual's life.

Delusion

A false belief held with strong conviction despite superior evidence to the contrary, often occurring as part of a psychiatric condition.