Multiple Choice
Megan took a pay cut from $10 an hour to $7 an hour. As a result of the wage decrease, Megan desires to work less hours and take more hours of leisure. For Megan
A) the substitution effect dominates the income effect.
B) the income effect dominates the substitution effect.
C) the substitution effect must equal the income effect.
D) the substitution effect must be zero.
Correct Answer:
Verified
Correct Answer:
Verified
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