An Increase in the Wage Rate Will

question 116

Multiple Choice

An increase in the wage rate will:

• A) normally generate a small income effect.
• B) generate a significant decrease in after-tax income.
• C) possibly lead people to choose more leisure rather than work more, since leisure is a normal good.
• D) cause businesses to increase the number of employees to reduce costs.

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Definitions:

Cognitive Dissonance Theory

A theory suggesting that individuals experience discomfort (dissonance) when their beliefs or behaviors are inconsistent, leading them to make changes to reduce this discomfort.

Unhealthy Behaviors

Actions or habits that are detrimental to physical or mental health, such as smoking, poor diet, and lack of exercise.

Confirmation Bias

The bias towards identifying, decoding, choosing, and memorizing details in a manner that validates one's preconceived ideas or suppositions.

Social Psychological Error

Involves misconceptions or biases in understanding or explaining the behavior of individuals in a social context.