QUESTION 1 When consumption and leisure are both normal goods, after an increase in real dividend increases consumption and reduces labor supply. increases consumption and increases labor supply. Oreduces consumption and increases labor supply. reduces consumption and reduces labor supply. QUESTION 2 An increase in total factor productivity could be the result of the introduction of new manufacturing methods. O adverse weather. the addition of new machinery. O new hires. QUESTION 3QUESTION 3 If dividend income increases, the following does not happen: O the substitution effect exceeds the income effect. the consumer chooses to consume more leisure. the consumer chooses to consume more consumption goods. the budget constraint shifts to the right. QUESTION 4 The quantity of labor supplied O may increase with the real wage, if the substitution effect is larger than the income effect. O is similar to the supply for any other good or service, as quantity supplied increases with price. may decrease with the real wage, if the income effect is smaller than the substitution effect. O always decreases when the real wage increases