Question 1
The substitution effect of a wage rate decrease suggests that
◦ individuals will supply more work.
◦ individuals will supply less work.
◦ individuals will consume less leisure.
◦ individuals will supply more work and consume less leisure.
Question 2
The income effect of a wage rate decrease should lead to
◦ an increase in the quantity of labor supplied and a decrease in leisure.
◦ an increase in the quantity of labor supplied and an increase in leisure.
◦ a decrease in quantity of labor supplied and an increase in leisure.
◦ a decrease in the quantity of labor supplied and a decrease in leisure.