1

For Dwigt, the substitution effect is greater than the income effect. As his market wages fall, he works hours. O fewer O more O the same number ofRyan is considering going to college by considering two time periods, right now (t = 0) and the future (t = 1). If he decides not to go to college, his best alternative is to work at the Subpar Sandwich Shop for real earnings of $10 right now and $30 in the future period. If he decides to go to college, he must pay a direct cost of $15 right now, but will have real earnings of $60 in the future period. Ryan's discount rate on the future is 5%. Should Ryan buy a college degree? O No! O Yes