If an individual's wage increases,it is theoretically ambiguous if the individual will work more or less.Why?
A) The wealth effect will decrease the number of hours worked,but no one knows the direction of the substitution effect.
B) The wealth effect has an ambiguous effect on the number of hours worked,but the substitution effect will increase the number of hours worked.
C) Both the wealth effect and substitution effect have an ambiguous effect on earnings.
D) The wealth effect will increase the number of hours worked,but the
Substitution effect will decrease the number of hours worked.
E) The wealth effect will decrease the number of hours worked,but the
Substitution effect will increase the number of hours worked.
Correct Answer:
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