1.Arrows up or down: An increase in the wage the opportunity cost of leisure time, which tends to
leisure time and
labor time.
2. Arrows up or down: An increase in the wage real income, and if leisure is a normal good this tends to
leisure time and
labor time.
3. We
(can/cannot) predict a worker’s response to an increase in the wage because
the effect and the effect work in
(the same/ opposite) direction(s).
4. Your objective is to earn exactly $120 per week. If your wage decreases from $6 to $4 per hour, you respond by working
hours instead of
hours. In other words, your labor-supply curve is
sloped.
5. In the short run, labor supply is influenced by the wage rate, while in the long run, it is influenced by net advantages of the job
. (True/False)
6. For cabbies in New York City, the elasticity of supply of labor is (positive/negative/zero). (Related to Application 2 on page 710.)