Assuming consumption and leisure are both normal goods, hours worked will fall when the wage increases if             Group of answer choicesif the income and substitution effect move in the same direction (i.e., if they are of the same sign).the substitution effect dominates the income effect.the wage increase is accompanied by an increase in prices.the income effect dominates the substitution effect.if the income and substitution effect move in the opposite direction (i.e., if they are of the opposite sign).

When the price of a normal good increases,Group of answer choicesboth the income and substitution effects encourage the consumer to purchase more of the good.both the income and substitution effects encourage the consumer to purchase less of the good.the income effect encourages the consumer to purchase less of the good, and the substitution effect encourages the consumer to purchase more of the good.the income effect encourages the consumer to purchase more of the good, and the substitution effect encourages the consumer to purchase less of the good.

Consider a consumer buying perfect complements. If there is a decrease in the price of good 1, the total change in consumption of good 1 is due toGroup of answer choicesthe pure substitution effectthe income effectthe pure substitution effect minus the income effectit depends on whether the good is inferior or normalnone of the above

The income effect of a price change is described by which of the following statements?Question 4Select one:a.When the price of a good falls, consumers have an implicit increase in income and can now buy more of the good.b.When the price of a good falls, consumers will now substitute this lower priced good for more higher priced goods.c.The income effect is the relative change in the amount of a good consumed when the price of another good changes.d.The income effect shows how a change in income at a given price will affect the quantity of a good purchased.

Multiple Select QuestionSelect all that applyThe income effect:Multiple select question.only works in conjunction with the law of diminishing marginal utility.works in the same direction as the substitution effect for normal goods. refers to the change in the demand for a good caused by a change in a consumer's purchasing power.is the same as the substitution effect.works in the same direction as the substitution effect for inferior goods.

How does the income effect impact the consumption of Giffen goods?An increase in income leads to less consumptionA decrease in income leads to more consumptionAn increase in income leads to more consumptionBoth a) and b)PREVIOUS