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Dhriti Works at a Local Factory for $12 an Hour

Question 96

Multiple Choice

Dhriti works at a local factory for $12 an hour and typically works 40 hours a week. The company threatens layoffs, so Dhriti and the other employees agree to a pay cut. Dhriti now earns $10 an hour and works every hour over 40 that her boss will let her. Because Dhriti's response to this pay cut was to work more, there is a dominant:


A) income effect.
B) price effect.
C) substitution effect.
D) labor effect.

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