As wage rates rise to extremely high levels,

A) the income effect becomes stronger than the substitution effect.
B) the substitution effect becomes stronger than the income effect.
C) both the income effect and substitution effect become stronger.
D) both the income effect and substitution effect become weaker.

Wage Rates

The fixed amount of compensation paid to employees for their labor, typically expressed as payment per hour or per month.

Income Effect

The alteration in a person's or an economy's earnings and the effect of this alteration on the demand for a specific product or service.

Substitution Effect

The economic principle that as prices rise or incomes decrease, consumers will replace more expensive items with less costly alternatives.