Use the Following to Answer Questions

question 329

Multiple Choice

Use the following to answer questions:
Figure: Rita's Time Allocation Budget Line
-(Figure: Rita's Time Allocation Budget Line) Look at the figure Rita's Time Allocation Budget Line. It is based on 80 hours available for labor and leisure. Rita chooses 40 hours of leisure and income of $280. When her hourly wage doubles, Rita chooses 50 hours of leisure and income of $420. The substitution effect is making her work _____, the income effect is making her work _____, and the substitution effect is _____ than the income effect.

• A) more; less; stronger
• B) less; more; stronger
• C) more; less; weaker
• D) less; more; weaker

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Definitions:

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A provision in a will or estate plan designed to determine what happens to a beneficiary's gift if the beneficiary predeceases the testator.

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