Assume That the Substitution Effect Dominates the Income Effect

question 78

Multiple Choice

Assume that the substitution effect dominates the income effect. When the government raises tax rates, after-tax real wage rates

• A) fall, consumption decreases, and labor supply increases.
• B) fall, consumption decreases, and labor supply decreases.
• C) rise, consumption increases, and labor supply increases.
• D) fall, consumption increases, and labor supply decreases.

---

Definitions:

Genetically Predisposed

A condition where an individual has a higher likelihood of developing certain traits or diseases due to their genetic composition.

Epigenetics

Inquiry into the effects of gene expression modification on organisms, excluding alterations to the DNA sequence.

Gene Expression

The process by which the instructions in our DNA are converted into a functional product, such as a protein, playing a crucial role in biological functions and characteristics.

DNA Change

Alterations in the genetic material of an organism, which can occur naturally through mutation or be induced artificially, affecting traits and possibly resulting in genetic disorders or variations.