Question

32. Suppose that in a labor market, the substitution effect is less important in magnitude than...

32. Suppose that in a labor market, the substitution effect is less important in magnitude than the income effect. As a result,

A. the labor demand curve is upward sloping.

B. the labor demand curve is downward sloping.

C. the labor supply curve is upward sloping.

D. the labor supply curve is downward sloping.

can you explain?thank you

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Option D

  • Income effect is said to occur when the wage increase causes people to spend more time on leisure while the substitution effect is said to occur when the wage increase causes people to work more.
  • If the substitution effect is less important in magnitude than the income effect than the opportunity cost of work hours Increases which causes workers to spend more time on leisure and devote Less time to working.
  • This will lead to a negative sloping labour supply curve and hence the labour supply curve slopes downwards.
Add a comment
Know the answer?
Add Answer to:
32. Suppose that in a labor market, the substitution effect is less important in magnitude than...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • In a noncompetitive labor market, the firm pays a wage that is less than the workers’...

    In a noncompetitive labor market, the firm pays a wage that is less than the workers’ value of marginal product because the labor supply curve is above the marginal cost of labor curve. the firm’s objective is to minimize the wage rather than to maximize profits. the marginal cost of labor curve is above the labor supply curve. labor is supplied inelastically. the firm’s labor demand curve is downward-sloping.

  • Suppose the wage decreases. What effect will this have on a worker's labor supply? The substitution...

    Suppose the wage decreases. What effect will this have on a worker's labor supply? The substitution effect of a wage decrease causes the worker to supply a smaller quantity of labor. The income effect of a wage decrease causes the worker to supply a larger quantity of labor If the substitution effect is bigger than the income effect, then the supply curve will slope upward

  • 3. This question is about the labor market for workers who produce widgets. A. Sketch this...

    3. This question is about the labor market for workers who produce widgets. A. Sketch this supply and demand model of the labor market for workers who produce widgets. Label the axes and the equilibrium wage and level of employment - B. Explain why the demand curve is downward sloping. -C. Explain why the supply curve is upward sloping - D. List one ceteris paribus factor in the supply curve. - E. List one ceteris paribus factor in the demand...

  • Suppose a commodity market is initially in equilibrium. An increase in the nation's skilled labor force...

    Suppose a commodity market is initially in equilibrium. An increase in the nation's skilled labor force then lower the marginal cost of producing each unit of output. Which of the following changes will be observed? a.The supply curve will shift upward (wrong answer ) b. The demand curve will shift downward c. the demand curve will shift upward d. the supply curve will shift downward

  • The labor market is composed of a. a relatively homogeneous supply of labor and downward-sloping demand...

    The labor market is composed of a. a relatively homogeneous supply of labor and downward-sloping demand curve. b. a vertical supply curve for labor and relatively elastic market demand. c. many submarkets for labor of different types. d. more teenagers than any other age group of labor.

  • d segment of the labor supply of a ployer is downward sloping, then segment, the income...

    d segment of the labor supply of a ployer is downward sloping, then segment, the income effect dominates the substitution effect. b) For that segment, the substation effect dominates the income effect a) For that is no wage that equilibrates the market because the labor demand is also downward sloping. d) The labor supply for that player is completely elastic. 1.7 When a firm charges different prices for the same good in different segments of the market (i.e. for different...

  • Suppose that it requires a special license in order to operate a firm in a certain...

    Suppose that it requires a special license in order to operate a firm in a certain type of industry. In addition, suppose that firms that hold such licenses are able to sell them for a high price. Which of the following statements is true? Select one: a. This is a typical monopolistically competitive market in which there are no economic profits in the long run. b. There is free entry by new firms into this industry. c. The government that...

  • [8] In Keynesian economics the most important factor determining whether the level of economic activity is...

    [8] In Keynesian economics the most important factor determining whether the level of economic activity is growing or shrinking is: A) the multiplier effect. B) government expenditure and tax policies. C) the behavior of nonincome-determined spending. D) the relationship between leakages from and injections into the spending stream. [9] Using the Keynesian approach, if leakages from the spending stream are less than injections, the current level of output is: A) less than the equilibrium level of output, and will increase....

  • When leisure is a normal good, the income effect from a decrease in wages is evident...

    When leisure is a normal good, the income effect from a decrease in wages is evident in a. a desire to consume more leisure. b. a desire to consume less leisure. c. an upward-sloping labor-supply curve. d. a shift in labor demand.

  • Be thorough and concise. If possible, include a graphical explanation as well as verba True/False/Uncertain. You...

    Be thorough and concise. If possible, include a graphical explanation as well as verba True/False/Uncertain. You must provide a proof for your answer. (20 points) 1. The supply curve of labor may be upward sloping, downward sloping or both- it depends on the relative size of substitution and income effects. The demand curve for labor is derived from the marginal product of labor curve- the portion that is subject to increasing returns to labor, due to specialization and division of...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT