The amount of money one would have to give a consumer to compensate them for the harm from a price increase is called

Select one:

a.

Income effect

b.

Substitution effect

c.

Equivalent variation

d.

Compensating variation is the amount of money one would have to give a consumer to compensate them for the harm from a price increase is called

A decrease in income, all else equal, will cause a rotation outward of the budget line.

Select one:

True

False

If a person supplies more hours of work (less leisure) when the wage increases, 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.

Ramen Noodles were once a normal good for Joan, but now Ramen Noodles are an inferior good for here. Joans demand curve for Ramen Noodles

Select one:

a.has become steeper as a result.

b.has become flatter as a result.

c.has not changed as a result.

d.has disappeared as a result.

If a person supplies fewer hours of labor in response to a wage increase, then

Select one:

a.the substitution effect is greater than the income effect.

b.the income effect is greater than the substitution effect.

c.the income effect equals the substitution effect.

d.the person is not maximizing utility.