The Substitution Effect of a Wage Increase

question 10

Multiple Choice

The substitution effect of a wage increase:

• A) results in an increase in the quantity of labor supplied.
• B) results in a decrease in the quantity of labor supplied.
• C) has no impact on the quantity of labor supplied.
• D) results in an increase in the quantity of leisure enjoyed.

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Definitions:

Scatterplots

Graphical representations that show the relationship between two quantitative variables, displaying data points on a two-dimensional graph.

Test Worthiness

Determined by an objective analysis of a test in four critical areas: (1) validity: whether or not it measures what it is supposed to measure; (2) reliability: whether or not the score an individual receives on a test is an accurate measure of his or her true score; (3) cross-cultural fairness: whether or not the score the individual obtains is a true reflection of the individual and not a reflection of cultural bias inherent in the test, and (4) practicality: whether or not it makes sense to use a test in a particular situation.

Cross-cultural Fairness

The extent to which assessments, tests, or measures are equitable and free of cultural bias across different cultural or ethnic groups.

Statistical Formation

Refers to the process of organizing and summarizing data through the use of tables, graphs, and statistical measures to make the data understandable and usable.