Suppose That Consumers' Preferences Are Well Behaved in That Properties

question 32

Multiple Choice

Suppose that consumers' preferences are well behaved in that properties 4-1 - 4-4 are satisfied.Furthermore, assume that X is a normal good, Y is an inferior good and the price of good X increases.Then the substitution effect will lead consumers to consume

• A)more of good X and more of good Y.
• B)less of good X and more of good Y.
• C)less of good X and less of good Y.
• D)more of good X and less of good Y.

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Definitions:

Non-Unionized Industries

Sectors of the economy where the workforce is not part of a labor union or covered by a collective bargaining agreement.

Recession

A phase of short-term economic downturn marked by decreased business and manufacturing operations, typically recognized by a decline in Gross Domestic Product for two consecutive quarters.

Efficiency-Wage Theory

The concept that employers may pay a higher wage than the market equilibrium to increase worker productivity, loyalty, and satisfaction, thereby reducing turnover and shirking.

Labor Unions

Organizations that represent workers in negotiations with employers over wages, working conditions, and benefits to protect their rights and interests.