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Barry's Wage Increased and He Responded by Working More Hours

Question 124

Multiple Choice

Barry's wage increased and he responded by working more hours. Which statement must be TRUE?


A) Leisure is an inferior good.
B) The substitution effect of the wage increase dominated the income effect.
C) The income effect of the wage increase dominated the substitution effect.
D) The substitution and income effect both increased hours of work.

Correct Answer:

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