The Slutsky Decomposition of the Effect of the Real Wage

question 4

Multiple Choice

The Slutsky decomposition of the effect of the real wage on a person's labor supply decision suggests that the negative income effect of such a wage change will be larger:​

• A)​the smaller is the quantity of labor supplied and the smaller is the effect of non-labor income.
• B)​the smaller is the quantity of labor supplied and the larger is the effect of non-labor income.
• C)​the larger is the quantity of labor supplied and the smaller is the effect of non-labor income.
• D)​the larger is the quantity of labor supplied and the larger is the effect of non-labor income.