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

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Review of Chapter 8 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. ____ 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. ____ 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
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