If she earns over-time premium, which leads to a greater income effect than substitution
effect.
There is no substitution effect
References
Multiple Choice Difficulty: Medium Learning Objective: 02-05 Interpret the
economic and other factors affecting a
married woman's decision to work, and
show how this decision can be captured
within the labour supply model.
34.
Award: 10.00 points
Which of the following statements regarding indifference curves is true?
If an individual has a lower valuation of leisure, then the slope of his indifference curve is
steeper.
If an individual has a lower valuation of leisure, then the marginal rate of substitution of
consumption over leisure is higher.
If an individual has a higher valuation of consumption, then the slope of his indifference
curve is flatter.
If an individual has a higher valuation of consumption, then the marginal rate of
substitution of consumption over leisure is higher.
None of these above
References
Multiple Choice Learning Objective:
02-02 Illustrate
graphically how the
labour supply model
reflects the income
and leisure trade-
offs that consumers
face in deciding
whether and how
much to work.
Difficulty: Hard Learning Objective:
02-03 Distinguish
theoretically
between the work
choices made by
individuals and the
economic
opportunities that
they choose from.
35.
Award: 10.00 points
36.
Award: 10.00 points
In the basic income-leisure model, how is the labour supply curve derived?
By varying the slope of the income constraint, finding the point of tangency with the
indifference curve, and reading the quantity of hours worked off of the horizontal axis
By varying the position of the indifference curve, finding the point of tangency with the
income constraint, and reading the quantity of hours worked off of the horizontal axis
By varying the slope of the income constraint, finding the point of tangency with the
indifference curve, and reading the wage off of the vertical axis
By varying the position of the indifference curve, finding the point of tangency with the
income constraint, and reading the wage off of the vertical axis
By varying the intercept of the income constraint, finding the point of tangency with the
indifference curve, and reading the quantity of hours worked off of the horizontal axis
References
Multiple Choice Difficulty: Medium Learning Objective: 02-04 Explain, using
diagrams, how an increase in the wage
rate leads to offsetting income and
substitution effects, and how this yields
an ambiguous effect of wage changes on
labour supply.
Which of the following statements regarding the added worker effect is true?
It resembles moonlighting
It works in a similar way as the discouraged worker effect
It tends to boost labour force participation when unemployment is low
It tends to reduce labour force participation when unemployment is high
It tends to boost labour force participation when unemployment is high
References
Multiple Choice Difficulty: Medium Learning Objective: 02-05 Interpret the
economic and other factors affecting a
married woman's decision to work, and
show how this decision can be captured
within the labour supply model.
37.
Award: 10.00 points
38.
Award: 10.00 points
Consider a worker who is supplying a positive number of hours. What could cause him to drop out
of the labour force?
A flattening of her indifference curve
A change in preferences such that he values income more
A decrease in non-labour income
An increase in the offered wage
A decrease in the offered wage
References
Multiple Choice Difficulty: Easy Learning Objective: 02-04 Explain, using
diagrams, how an increase in the wage
rate leads to offsetting income and
substitution effects, and how this yields
an ambiguous effect of wage changes on
labour supply.
Consider a worker who is working a second job at lower pay because she needs to pay her
mortgage payments. This choice is most closely associated with:
A reservation wage effect
A substitution effect
An income effect
A labour force participation effect
A backward bending supply curve
References
Multiple Choice Difficulty: Medium Learning Objective: 02-05 Interpret the
economic and other factors affecting a
married woman's decision to work, and
show how this decision can be captured