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An Increase in the Wage Will Produce a Substitution Effect

Question 41

Multiple Choice

An increase in the wage will produce a substitution effect and an income effect. What is the income effect of a wage change?


A) as the wage increases, workers have more income and will want to work more.
B) as the wage increases, workers have more income and will want to consume more leisure.
C) as the wage increases, workers have more income and will go on more vacations.
D) as the wage increases, workers have more income, and will enjoy more intensive leisure activities.

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