Figure 18-3 Shows Two Different Compensation Schemes for the Youness

Figure 18-3 shows two different compensation schemes for the Youness Corporation, an installer of auto glass windshields. Under Scheme I, the firm pays a consistent daily wage of $80 per day based on an 8-hour workday. Q_Min in represents the cut-off point under the hourly-wage system: if a worker installed fewer than Q_Min in windshields, the worker got fired. Scheme II represents a piece-rate scheme with an earnings floor: no worker would get less than $80 per day (for an 8-hour workday) and would have to produce at least Q_Min in. For any output level beyond Q* the worker earned an additional $20 for each unit produced.
-Refer to Figure 18 -2. Which of the following statements is true?

A) Panel B correctly describes a situation in which the income effect dominate the substitution effect at low wages (segment i) and again at very high wages (segment iii) .
B) Panel B incorrectly describes a situation in which the income effect dominate the substitution effect at low wages (segment i) .
C) Panel B incorrectly describes a situation in which the income effect dominate the substitution effect at low wages (segment i) and a situation in which the substitution effect dominate the income effect at very high wages (segment iii) .
D) Panel B incorrectly describes a situation in which the income effect dominate the substitution effect at very high wages (segment iii)