What does the income effect indicate about the relationship between the wage rate and leisure on the quantity of labour supplied?
A) At a higher wage rate, the quantity of labour supplied increases because leisure is considered an inferior good.
B) At a higher wage rate, the quantity of labour supplied decreases because leisure is considered an inferior good.
C) At a higher wage rate, the quantity of labour supplied decreases because leisure is considered a normal good
D) At a higher wage rate, the quantity of labour supplied increases because leisure is considered a normal good.
Correct Answer:
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