If an Individual's Labor Supply Curve Is Downward Sloping, This

question 139

Multiple Choice

If an individual's labor supply curve is downward sloping, this indicates that:

• A) the individual has become wealthier.
• B) the income effect dominates the substitution effect.
• C) the substitution effect dominates the income effect.
• D) the individual faces a diminishing marginal utility for leisure.

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Definitions:

Budget Line

A graphical representation of all possible combinations of two goods that an individual can afford with their limited budget at set prices.

Indifference Curves

Graphical representations showing combinations of two goods that provide an individual with the same level of satisfaction, indicating preferences without implying superiority.

Slope

The measure of the steepness or incline of a line or surface, typically described as a ratio of vertical change to horizontal change.

Budget Line

An illustration showing all the combinations of two items that can be bought given certain prices and a specified budget.