The Income Effect of a Higher Real Wage on the Quantity

question 102

Multiple Choice

The income effect of a higher real wage on the quantity of labor supply is the

• A)idea that workers feel psychologically wealthier when wages are higher, so they work more.
• B)effect that income must rise when wages rise.
• C)tendency of workers to supply more labor in response to becoming wealthier.
• D)tendency of workers to supply less labor in response to becoming wealthier.

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Definitions:

Cobb-Douglas

A form of production function used in economic modeling, characterized by its representation of the relationship between two or more inputs and the resulting output.

Minimize Costs

The process of finding ways to decrease expenses and reduce the amount it costs to produce a good or offer a service.

Units of Labor

Quantitative measures representing the workforce or the effort exerted by workers in the production of goods and services.

Dress Factory

A manufacturing facility where dresses are produced in large quantities.