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Empirical Evidence with Respect to the Labor Supply Decision Suggests

Question 38

Multiple Choice

Empirical evidence with respect to the labor supply decision suggests that

A) the income effect seems to dominate for most people, which means that the aggregate labor supply responds negatively to an increase in the wage rate.
B) the substitution effect seems to dominate for most people, which means that the aggregate labor supply responds positively to an increase in the wage rate.
C) the substitution effect seems to dominate for most people, which means that the aggregate labor supply responds negatively to an increase in the wage rate.
D) the income effect seems to dominate for most people, which means that the aggregate labor supply responds positively to an increase in the wage rate.

Correct Answer: