Review Chapter 8

Review Chapter 8 - Review of Chapter 8 Multiple Choice...

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Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. When the wage rate falls, the price of an hour’s leisure a. increases. b. is indeterminate. c. remains constant. d. is irrelevant. e. decreases. ____ 2. A reduction in the wage rate has an income effect, which results in _____ consumption of leisure, and a substitution effect, which results in _____ consumption of leisure. a. reduced; reduced b. reduced; increased c. unchanged; reduced d. increased; reduced e. increased; increased ____ 3. A reduction in the wage rate has an income effect, which results in _____ hours worked, and a substitution effect, which results in _____ hours of work. a. fewer; more b. fewer; fewer c. no change in; fewer d. more; more e. more; fewer ____ 4. An increase in the wage rate has an income effect and a substitution effect, which operate in opposite directions. If the substitution effect dominates, the labor-supply curve a. is upward sloping. b.
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This note was uploaded on 02/07/2011 for the course ECON 221 taught by Professor Williamson during the Fall '05 term at Cal Poly.

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Review Chapter 8 - Review of Chapter 8 Multiple Choice...

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