A lower wage:
A) has an income effect but not a substitution effect on the quantity of labor supplied.
B) means a higher income for any given level of labor supplied.
C) has an income effect that is always negative with respect to the quantity of labor supplied.
D) has an income effect that is always positive with respect to the quantity of labor supplied.

Question

Quizplus · Accepted Answer

A lower wage reduces income, which may lead workers to supply more labor to maintain their income level, indicating a negative income effect on labor supply.

A Lower Wage