Suppose a consumer's labor supply is negatively sloped, meaning as wage increases, the consumer supplies less labor (more leisure is consumed). This indicates that that leisure is an inferior good The magnitude of the income effect is greater than the magnitude of the substitution effect The magnitude of the income effect is smaller than the magnitude of the substitution effect O The income effect and substitution effect both are the same sign (move in same direction)

Suppose a consumer's labor supply is negatively sloped, meaning as wage increases, the consumer supplies less labor (more leisure is consumed). This indicates that that leisure is an inferior good The magnitude of the income effect is greater than the magnitude of the substitution effect The magnitude of the income effect is smaller than the magnitude of the substitution effect O The income effect and substitution effect both are the same sign (move in same direction)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose a consumer's labor supply is negatively sloped, meaning as wage increases, the consumer
supplies less labor (more leisure is consumed). This indicates that
that leisure is an inferior good
The magnitude of the income effect is greater than the magnitude of the substitution effect
The magnitude of the income effect is smaller than the magnitude of the substitution effect
O The income effect and substitution effect both are the same sign (move in same direction)

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