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Consider the Above Figure

Question 26

Multiple Choice

  Consider the above figure.If the wage rate is initially $8 per hour and subsequently increases to $12 per hour,then A)  the income effect dominates and optimal hours of work increase by 3 hours. B)  the income effect dominates and optimal hours of work decrease by 3 hours. C)  the substitution effect dominates and optimal hours of work increase by 3 hours. D)  the substitution effect dominates and optimal hours of work decrease by 3 hours.
Consider the above figure.If the wage rate is initially $8 per hour and subsequently increases to $12 per hour,then


A) the income effect dominates and optimal hours of work increase by 3 hours.
B) the income effect dominates and optimal hours of work decrease by 3 hours.
C) the substitution effect dominates and optimal hours of work increase by 3 hours.
D) the substitution effect dominates and optimal hours of work decrease by 3 hours.

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