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When Is the Income Effect of a Wage Increase Observed

Question 88

Multiple Choice

When is the income effect of a wage increase observed?


A) The higher wage income causes workers to take more leisure and work less.
B) Leisure's higher opportunity cost causes workers to take less leisure and work more.
C) The higher wage income causes workers to take less leisure and work more.
D) Leisure's higher opportunity cost causes workers to take more leisure and work less.

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