A lower wage:
A) has an income effect but not a substitution effect on the quantity of labor supplied.
B) means a higher income for any given level of labor supplied.
C) has an income effect which is always negative with respect to the quantity of labor supplied.
D) has an income effect which is always positive with respect to the quantity of labor supplied.

Question

Quizplus · Accepted Answer

A lower wage decreases the income for any given level of labor supplied, which can lead to a negative income effect, potentially reducing the quantity of labor supplied as individuals may need to work more to maintain their income.

A Lower Wage