Figure 17-4 -Refer to Figure 17-4. Which of the Following Is True

question 26

Multiple Choice

Figure 17-4
-Refer to Figure 17-4. Which of the following is true if the wage rate increases from W1 to W2?

• A) The income effect is larger than the substitution effect.
• B) The substitution effect is larger than the income effect.
• C) The income effect and the substitution effect are equal.
• D) The supply curve is unit-elastic.

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Definitions:

Framing

The way information or issues are presented and the effect this presentation has on perception and decision-making.

Availability

In psychology, it refers to the ease with which a particular thought or memory can be accessed from memory, often influencing judgments and decision-making.

Representativeness

A cognitive heuristic where an individual categorizes a situation based on how similar it is to the typical case or to their standard representation of such a case.

Heuristics

Mental shortcuts or rules of thumb that simplify decision making, often used unconsciously to make judgments and solve problems quickly.