Which of the Following Best Explains Why the Elasticity of Supply

question 13

Multiple Choice

Which of the following best explains why the elasticity of supply of labor for an individual with a Cobb-Douglas utility function (for consumption and leisure) is zero?

• A)Income and substitution effects are precisely offsetting.
• B)The elasticity of substitution of leisure for consumption is zero.
• C)Leisure is an inferior good.
• D)Consumption is subject to diminishing marginal utility.

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