1.) In the labor-leisure model, price of another hour of leisure

Select one:

a.is determined by the price of consumption goods.

b.depends on the number of hours worked.

c.depends on the number of hours of time available for leisure or work

d.is the opportunity cost of foregone earnings.

2.)

An increase in the wage rate will

Select one:

a.shift the budget constraint out

b.shift the budget constraint inward.

c.rotate the budget constraint outward.

d.rotate the budget constraint inward

3.)

An increase in the price of leisure would be caused by

Select one:

a.an increase in the wage rate

b.a decrease in the wage rate

c.an increase in non-labor income

d.an increase in taxes on wages

4.)

An increase in non-labor income would

Select one:

a.shift the budget constraint out

b.shift the budget constraint inward.

c.rotate the budget constraint outward.

d.rotate the budget constraint inward

5.)

In the labor-leisure model, which best describes the substitution effect?

Select one:

a.the price of leisure increases causing a person to work less.

b.the wage increases, so people need to work less to maintain any given income

c.the wage decreases causing a person to consume more leisure hours

d.none of the above.

6.)

In the labor-leisure model, which best describes the income effect?

Select one:

a.the price of leisure increases causing a person to work less.

b.the wage increases, so people need to work less to maintain any given income

c.the wage decreases causing a person to consume more leisure hours

d.none of the above

7.)

The wage increases and a worker increases the hours they work work (less leisure), then

Select one:

a.the substitution effect dominates the income effect.

b.the income effect dominates the substitution effect.

c.the income effect equals the substitution effect.

d.the person is not maximizing utility.