Figure 14.1.4
A consumer's original utility maximizing combination of income and leisure is shown in the diagram above as point A. After a wage decrease, the consumer's utility maximizing combination changes to point C.
-Refer to Figure 14.1.4 above. The substitution effect of the wage decrease on the amount of hours of leisure is:

Question

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The Answer of Figure 14.1.4 A consumer's original utility maximizing combination of income and leisure is shown in the diagram above as point A. After a wage decrease, the consumer's utility maximizing combination changes to point C. -Refer to Figure 14.1.4 above. The substitution effect of the wage decrease on the amount of hours of leisure is: A) L₁ to L₀. B) L₀ to L₁. C) L₁ to L₂. D) L₂ to L₀. E) none of the above

Figure 14.1.4 A Consumer's Original Utility Maximizing Combination of Income and Leisure