Author Question: If labor supply is increasing in the real wage, then A) the substitution effect is larger than ... (Read 164 times)

Beheh · **on:** Jun 30, 2018

If labor supply is increasing in the real wage, then

A) the substitution effect is larger than the income effect.
B) the income effect is larger than the substitution effect.
C) the production function is increasing in labor.
D) the marginal product of labor is decreasing.

Question 2

As the real wage increases, assuming that the substitution effect dominates, then

a. individuals move to lower indifferent curves and consume less leisure.
b. individuals move to higher indifferent curves and consume less leisure.
c. individuals move to higher indifferent curves and consume more leisure.
d. individuals stay on the same indifferent curve and consume more leisure.