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Mickey Got a Raise from $14 an Hour to $20

Question 3

Multiple Choice

Mickey got a raise from $14 an hour to $20 an hour. As a result of the wage increase, Mickey desires to work more hours and take less hours of leisure. For Mickey


A) the substitution effect dominates the income effect.
B) the income effect dominates the substitution effect.
C) the substitution effect must equal the income effect.
D) the substitution effect must be zero.

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