When consumption and leisure are both normal goods,after an increase in real dividend income minus taxation,the rational consumer
A) increases consumption and increases leisure.
B) increases consumption and reduces leisure.
C) reduces consumption and increases leisure.
D) reduces consumption and reduces leisure.

Question

Quizplus · Accepted Answer

When both consumption and leisure are normal goods, an increase in real dividend income minus taxation leads to an increase in both consumption and leisure, as the consumer can afford more of both goods.

When Consumption and Leisure Are Both Normal Goods,after an Increase