Because Leisure Is a Normal Good, an Increase in the Wage

question 101

Multiple Choice

Because leisure is a normal good, an increase in the wage rate will result in

• A)an increase in the quantity of labor supplied because of both the substitution effect and the income effect.
• B)a decrease in the quantity of labor supplied because of the substitution effect and an increase in the quantity of labor supplied because of the income effect.
• C)an increase in the quantity of labor supplied because of the substitution effect and a decrease in the quantity of labor supplied because of the income effect.
• D)an increase in the quantity of labor supplied because of the substitution effect. At low wages the income effect causes an increase in the quantity of labor supplied, but at high wages the income effect causes a decrease in the quantity of labor supplied as the wage rises.

---

Definitions:

Financials

Pertains to the monetary aspects and performance of a business, including income, expenses, and profitability.

Products And Services

The combination of physical goods and intangible services that are offered by a business to satisfy the needs and wants of consumers.

Flexible Production

A manufacturing approach that allows for quick adjustments to production processes and product types to meet changing market demands.

Inventory Adjustments

Adjustments made to the book value of inventory to reflect actual stock levels, often due to loss, theft, spoilage, or errors in counting.