Recall the Application about the response of New York City cab drivers to an increase in cab fares to answer the following question(s) .
-Recall the Application. A study of the taxi market in New York City showed that when cab fares increase, thereby increasing the wages of cab drivers
A) the income effect for leisure demand outweighs the substitution effect for leisure demand.
B) the substitution effect for leisure demand outweighs the income effect for leisure demand.
C) the income effect for leisure demand and the substitution effect for leisure demand work in the same direction, causing the labor supply to increase.
D) the income effect for leisure demand and the substitution effect for leisure demand work in the same direction, causing the labor supply to decrease.
Correct Answer:
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