Figure 16-3
-Refer to Figure 16-3. Assume Panel B represents the labor supply curve. Which of the following statements about Panel B is true?
A) Panel B describes a situation in which the income effect dominates the substitution effect at low wages (segment i) and again at very high wages (segment iii) .
B) Panel B describes a situation in which the income effect dominates the substitution effect at low wages (segment i) and a situation in which the substitution effect dominates the income effect at very high wages (segment iii) .
C) Panel B describes a situation in which the substitution effect dominates the income effect at low wages (segment i) .
D) Panel B describes a situation in which the income effect dominates the substitution effect at every level of wages (segments i, ii, and iii) .
Correct Answer:
Verified
