What Is the Combined Effect (Both Income and Substitution)of a Wage

question 72

Multiple Choice

What is the combined effect (both income and substitution) of a wage increase?

• A)The substitution effect always dominates, leading to more work at a higher wage.
• B)The income effect always dominates, leading to less work at a higher wage.
• C)If the substitution effect outweighs the income effect, the labour supply curve slopes upward, but if the income effect outweighs the substitution effect, the labour supply curve is backward bending.
• D)If the substitution effect outweighs the income effect, the labour supply curve is backward bending, but if the income effect outweighs the substitution effect, the labour supply curve slopes upward.

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Definitions:

Fugitive

A person who has escaped from captivity or is in hiding to avoid arrest or persecution.

Footprints

Marks left by a foot or shoe on a surface, often used metaphorically to refer to evidence or a trace of someone's presence or impact.

Valid Argument

An argument in which, if the premises are true, the conclusion necessarily follows, maintaining logical consistency.

Fugitive

A person who has escaped from capture or is in hiding, often to avoid arrest or persecution.