For Most Low-Wage Earners

question 42

Multiple Choice

For most low-wage earners,

• A)the income effect of a wage rate increase is likely to be larger than the substitution effect.
• B)the substitution effect of a wage rate increase is likely to equal the income effect.
• C)the opportunity cost of leisure is high.
• D)the substitution effect of a wage rate increase is likely to be larger than the income effect.

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Definitions:

Investment Turnover

A ratio that measures the efficiency of a company in generating sales from its investments in assets.

Assets

The resources owned by a business.

Residual Income

The amount of income that an individual or company has after all personal debts and expenses, including a mortgage, have been paid.

Operating Income

Earnings before interest and taxes (EBIT), reflecting a company's profit from its core business operations.