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Figure 14.1 A Consumer's Original Utility Maximizing Combination of Income and Leisure

Question 32

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  Figure 14.1 A consumer's original utility maximizing combination of income and leisure is shown in the diagram above as point A. After a wage increase, the consumer's utility maximizing combination changes to point C. -Refer to Figure 14.1. The substitution effect of the wage increase on the amount of hours of leisure is: A)  L<sub>1</sub> to L<sub>0 </sub> B)  L<sub>1</sub> to L<sub>2</sub>. C)  L<sub>0</sub> to L<sub>2</sub>. D)  L<sub>0</sub> to L<sub>1</sub>. E)  none of the above Figure 14.1
A consumer's original utility maximizing combination of income and leisure is shown in the diagram above as point A. After a wage increase, the consumer's utility maximizing combination changes to point C.
-Refer to Figure 14.1. The substitution effect of the wage increase on the amount of hours of leisure is:


A) L1 to L0
B) L1 to L2.
C) L0 to L2.
D) L0 to L1.
E) none of the above

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