This figure depicts a model of labour supply and consumption for the US in 1900 and 2013. The wage rate is shown to have increased between the two years. Which of the following are true? (Ignore the dashed orange line) IC Consumption ($) 300 225 150 75 0 8 10 12 16₂ 14 D 16 18 Hours of free time 20 a. The income effect dominates the substitution effect, leading to a reduction in the hours of work. b. According to this model, Americans work more and consume more in 2013 than in 1900 c. The substitution effect dominates the income effect, leading to an increase in the hours of work. d. According to this model, Americans consume more and enjoy more free time in 2013 than in 1900 22 24

This figure depicts a model of labour supply and consumption for the US in 1900 and 2013. The wage rate is shown to have increased between the two years. Which of the following are true? (Ignore the dashed orange line) IC Consumption ($) 300 225 150 75 0 8 10 12 16₂ 14 D 16 18 Hours of free time 20 a. The income effect dominates the substitution effect, leading to a reduction in the hours of work. b. According to this model, Americans work more and consume more in 2013 than in 1900 c. The substitution effect dominates the income effect, leading to an increase in the hours of work. d. According to this model, Americans consume more and enjoy more free time in 2013 than in 1900 22 24

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Explain in detail Discuss the possible substitution effect and the income effect of an increase in income on leisure time.
ASAP pls Discuss the possible substitution effect and the income effect of an increase in income on leisure time..
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Please provide an accurate solution ASAP.