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Question
Figure 14.2
A consumer's original utility maximizing combination of income and leisure is shown in the diagram above as point A. After a wage decrease, the consumer's utility maximizing combination changes to point C.
Refer to Figure 14.2. The substitution effect of the wage decrease on the amount of hours of leisure is:
A) L1 to L0.
B) L0 to L1.
C) L1 to L2.
D) L2 to L0.
E) none of the above
Answer
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