Use the following figure to answer the question : Figure 17-1 : shows the weekly income (in dollars) and leisure (in hours) of a worker using an indifference curve and a budget line.

-Refer to Figure 17-1.If the number of leisure hours is OL₃ after a change in the wage rate,it implies that:

Question

Use the following figure to answer the question : Figure 17-1 : shows the weekly income (in dollars) and leisure (in hours) of a worker using an indifference curve and a budget line.

-Refer to Figure 17-1.If the number of leisure hours is OL₃ after a change in the wage rate,it implies that:

Quizplus · Accepted Answer

When the number of leisure hours is OL₃, the worker is consuming less leisure and more income, which implies that the income effect is dominant over the substitution effect. Therefore, the correct choice is A, the income effect of the wage change is greater than the substitution effect.

Use the Following Figure to Answer the Question : Figure