The income effect in an individual's labor/leisure choice is that
A) a higher wage makes leisure more attractive, because more can be consumed with less income loss.
B) a higher wage makes work a more attractive alternative, so more work results.
C) lower wages cause firms to operate less often.
D) work and leisure can be substituted for one another, because they are generally mutually exclusive activities.
E) a higher wage makes work less necessary, so less of it is done.
Correct Answer:
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