Use the Following Figure to Answer the Question : Figure

Multiple Choice

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:

A) the income effect of the wage change is greater than the substitution effect.
B) the income effect of the wage change is less than the substitution effect.
C) the income effect of the wage change exactly offsets the substitution effect.
D) the income and substitution effects of a wage change operate in the same direction.