Use the Following Figure to Answer the Question : Figure

question 58

Multiple Choice

Use the following figure to answer the question : Figure 17-1 : shows the weekly income (in dollars) and leisure (in hours) of a worker using an indifference curve and a budget line.

-Refer to Figure 17-1.If the number of leisure hours is OL₃ after a change in the wage rate,it implies that:

• A)the income effect of the wage change is greater than the substitution effect.
• B)the income effect of the wage change is less than the substitution effect.
• C)the income effect of the wage change exactly offsets the substitution effect.
• D)the income and substitution effects of a wage change operate in the same direction.

---

Definitions:

Substitute Goods

Products or services that can serve as replacements for one another, satisfying the same consumer need.

Perfect Tender Rule

A legal principle in sales law requiring goods delivered under a contract to exactly meet the terms, quantities, and quality specified by the buyer.

Defective Goods

Products that are not functioning as intended or are unsafe due to manufacturing flaws, design defects, or inadequate instructions.

Constitutes Acceptance

The act or process that signals agreement to the terms of an offer, thereby creating a binding contract.