If the Income Effect Is Less Than the Substitution Effect

question 289

Multiple Choice

If the income effect is less than the substitution effect and the wage rate decreases, individuals

• A) will supply more work.
• B) will supply less work.
• C) will consume less leisure.
• D) cannot be determined from the given information

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Definitions:

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor directly involved in creating the product.

Percentage

A way of expressing a number as a fraction of 100, denoted by the symbol %.

Rate

A specified measure or quantity considered in relation to another quantity or measure, often used in financial contexts to describe interest or growth rates.

Proportion

A part, share, or number considered in comparative relation to a whole.