If His Wage Rate Increases, Then a Utility Maximizing Consumer

question 5

Multiple Choice

If his wage rate increases, then a utility maximizing consumer will necessarily

• A)increase (or leave constant)his labor supply.
• B)increase (or leave constant)his labor supply if leisure is a normal good but otherwise might reduce his labor supply.
• C)increase (or leave constant)his labor supply if leisure is an inferior good but otherwise might reduce his labor supply.
• D)decrease (or leave constant)his labor supply.
• E)none of the above.

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Definitions:

Legal Expenses

Costs incurred by an entity related to the legal services provided for the business, such as attorney fees, litigation expenses, and other legal consultancy fees.

Depletion

Depletion is an accounting method used to allocate the cost of extracting natural resources such as minerals, oil, and gas from the earth over the period they are consumed.

Straight-Line Method

A method of calculating depreciation of an asset, which spreads the cost evenly across its useful life.

Units-of-Activity Method

A depreciation method that allocates costs based on the actual usage or output of the asset rather than time.