If a Person Supplies Fewer Hours of Labor in Response

question 40

Multiple Choice

If a person supplies fewer hours of labor in response to a wage increase,then

• A) the substitution effect is greater than the income effect.
• B) the income effect is greater than the substitution effect.
• C) the income effect equals the substitution effect.
• D) the person is not maximizing utility.

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Definitions:

Scale

A measurement tool or system that quantifies or categorizes variables, often used in surveys and research.

Factor Analysis

A statistical technique that uncovers latent variables or factors responsible for the correlation patterns among a collection of observed variables.

Variables

Characteristics or conditions that can change and potentially affect the outcome of a study or experiment.

Interrelationships

The way in which two or more concepts, objects, or people are connected and affect each other.