Econ 315 Exam 2 Complete Questions And Answers With Verified Solutions

Econ 315 Exam 2 Complete Questions And Answers With Verified Solutions An increase in the wage rate when the substitution effect dominated will labor force participation and hours of work increase, increase Indifference curves drawn with leisure and income on the axes have negative slopes because people are willing to give up income to obtain more leisure and vice versa An increase in non labor income due to a rise in the value of stocks and bonds will cause a pure income effect If a worker's desired hours of labor do not change after a decrease in his wage rate then his income and substitution effects are of equal magnitude What is the significance of the slope of the worker's budget constraint? the slope, multiple by -1, represents the worker's hourly wage rate If income is held constant and the wage rate increases, the desired hours of work will increase If alice's wage increase from $6 per hour to $6.50 per hour then she may want to work more, fewer, or the same number of hours as before On the portion of a worker's labor supply curve that is backwards bending, the income effect outweighs the substitution effect