Use the Following to Answer Questions

question 7

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 labour and leisure.Rita chooses 40 hours of leisure and an income of $280.When her hourly wage doubles,Rita chooses 50 hours of leisure and an 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

---

Definitions:

Long-Run Profit

The sustained earning capacity of a company over an extended period, considering both fixed and variable costs.

Non-Value-Added Activity

Processes or tasks that consume resources but do not add value or enhance the product or service from the customer's perspective.

Partly Finished Production

Items or goods that have undergone some stages of the production process but are not yet complete.

Life Cycle Costing

An approach to assessing the total cost of ownership, factoring in all costs of acquiring, owning, and disposing of a system or product.