Tom Started Working Five Hours More Each Week,after Receiving a $5

question 27

Multiple Choice

Tom started working five hours more each week,after receiving a $5 per hour increase in his hourly wage.This indicates that:

• A)the income effect of the wage increase exceeded the substitution effect.
• B)the substitution effect of the wage increase exceeded the income effect.
• C)Tom's wage elasticity is equal to one.
• D)Tom's wage elasticity is low.

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