Quiz_173 - 51 , A B

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51) Because leisure is a normal good, an increase in the wage rate will result in A) an increase in the quantity of labor supplied because of the substitution effect and a decreasein the quantity of labor supplied because of the income effect.B) an increase in the quantity of labor supplied because of both the substitution effect and theincome effect.C) an increase in the quantity of labor supplied because of the substitution effect. At low wagesthe income effect causes an increase in the quantity of labor supplied, but at high wages theincome effect causes a decrease in the quantity of labor supplied as the wage rises.D) a decrease in the quantity of labor supplied because of the substitution effect and an increasein the quantity of labor supplied because of the income effect.Answer: A 51) Diff: 3 Page Ref: 551/551 Topic: Substitution and Income Effects of a Wage Change Learning Outcome: Micro 17: Explain the effects of the factors of production, factor demand, and factor supply and labor in factor markets AACSB: Reflective Thinking 52) In order for a labor supply curve to be backward bending at high wages 52) Diff: 2 Page Ref: 551/551 Topic: The Supply of Labor Learning Outcome: Micro 17: Explain the effects of the factors of production, factor demand, and factor supply and labor in factor markets AACSB: Reflective Thinking
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  • Fall '13
  • Prime number, AACSB, Page Ref, factor demand

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