Assume That the Income Effect Dominates the Substitution Effect

Multiple Choice

Assume that the income effect dominates the substitution effect. When workers experience a ________ price surprise, they ________ perceive that their real wage rate has ________, which leads them to work fewer hours.

A) positive; correctly; risen
B) negative; correctly; fallen
C) negative; incorrectly; risen
D) positive; incorrectly; risen