1. What is the relationship between working hours and wage levels? (A). An increase in the wage rate increases working hours if the substitution effect dominates the income effect. (B). An increase in the wage rate reduces the hours worked if the dominating effect is a substitution effect. (C). A decrease in the wage rate increases working hours if the substitution effect dominates the income effect. (D). Answers (A) and (B) are correct. (E). Answers (A) and (C) are correct.
1. What is the relationship between working hours and wage levels? (A). An increase in the wage rate increases working hours if the substitution effect dominates the income effect. (B). An increase in the wage rate reduces the hours worked if the dominating effect is a substitution effect. (C). A decrease in the wage rate increases working hours if the substitution effect dominates the income effect. (D). Answers (A) and (B) are correct. (E). Answers (A) and (C) are correct.
Chapter12: Labor Markets And Labor Unions
Section: Chapter Questions
Problem 1.2P
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1. What is the relationship between working hours and wage levels?
(A). An increase in the wage rate increases working hours if the substitution effect dominates the income effect.
(B). An increase in the wage rate reduces the hours worked if the dominating effect is a substitution effect.
(C). A decrease in the wage rate increases working hours if the substitution effect dominates the income effect.
(D). Answers (A) and (B) are correct.
(E). Answers (A) and (C) are correct.
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