Solved

Figure 16-4 -Refer to Figure 16-4. Which of the Following Is True

Question 32

Multiple Choice

Figure 16-4
Figure 16-4 -Refer to Figure 16-4. Which of the following is true if the wage rate increases from W1 to W2? A) The income effect eventually becomes larger than the substitution effect. B) The substitution effect eventually becomes larger than the income effect. C) The income effect and the substitution effect are equal. D) The supply curve is unit elastic.
-Refer to Figure 16-4. Which of the following is true if the wage rate increases from W1 to W2?

A) The income effect eventually becomes larger than the substitution effect.
B) The substitution effect eventually becomes larger than the income effect.
C) The income effect and the substitution effect are equal.
D) The supply curve is unit elastic.

Correct Answer: