An Increase in Wealth Will Cause the Labour Supply Curve

question 234

Multiple Choice

An increase in wealth will cause the labour supply curve to:

• A) shift leftward if leisure is a normal good.
• B) slope downward if the substitution effect dominates the income effect.
• C) slope upward only if leisure is an inferior good.
• D) bend backward if the income effect outweighs the substitution effect of a change in wealth and if leisure is a normal good.

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Definitions:

Normal Distribution

A probability distribution that is symmetrically centered around the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Vertical Blinds

Window coverings consisting of vertical slats that can be adjusted to control light and visibility.

Null Hypothesis

A statistical hypothesis that assumes no significant difference or effect in a particular situation, serving as the default assumption to be tested against an alternative hypothesis.

Alternative Hypothesis

A statistical hypothesis that specifies a population parameter's value is different from the value stated in the null hypothesis.