11. Again, considering the graph to the right, after the increase in wages we observe her new consumption/leisure to be at the point N. This suggests that:
- she is on the backward bending portion of her labor supply curve.
- she is being paid too much.
- the opportunity cost of leisure has fallen for her.
- consumer goods are inferior goods for her.
- the income effect of her wage increase is dominated by the substitution effect.
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