The following figure shows a model of free time and consumption per day across countries in 2020. Assume that the nationals of the US and Turkey have the same preferences (the same set of indifference curves) and those of Mexico and Netherlands have the same preferences. From the information given, read the following statements and select the correct one.
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Question

The following figure shows a model of free time and consumption per day across countries in 2020. Assume that the nationals of the US and Turkey have the same preferences (the same set of indifference curves) and those of Mexico and Netherlands have the same preferences. From the information given, read the following statements and select the correct one.

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Accepted Answer

For Turkish nationals, the income and substitution effects roughly cancel each other out if their wage level is increased to that of the US.

Answer

US and Dutch nationals could have the same preferences.

Answer

If the wages in Turkey increased to the level in the Netherlands, the goods consumption there could be lower than that of the Netherlands.

Answer

A wage rise in Mexico to the level in the Netherlands will lead to an increase in labour supply.

Crowdly

The following figure shows a model of free time and consumption per day across c...

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