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FAITHBELLE FAITHBELLE
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Posts: 328
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A week ago

Question 1.

For most low-wage earners



the substitution effect of a wage rate increase is likely to equal the income effect.



the opportunity cost of leisure is high.



the income effect of a wage rate increase is likely to be larger than the substitution effect.



the substitution effect of a wage rate increase is likely to be larger than the income effect.



Question 2.

Francis Crawford recently received a 20 percent wage increase and desires to work less. We can conclude that at his current wage his supply of labor curve



has a positive slope.



is vertical.



has a negative slope.



is U-shaped.

Textbook 

InMicro


Edition: 1st
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dnlee1dnlee1
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Posts: 284
A week ago
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Answer 1

the substitution effect of a wage rate increase is likely to be larger than the income effect.



Answer 2

has a negative slope.

1

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