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
Correct Answer:
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