Question

If wages increase, will a worker supply more labor?

A. Only if the substitution effect is larger than the income effect.

B. Yes because the substitution and income effects both cause workers to supply a larger quantity of labor.

C. No because the income effect causes workers to supply a smaller quantity of labor.

D. Yes because the substitution effect causes workers to supply a larger quantity of labor.

E. Only if the income effect is larger than the substitution effect.