Divided between working for day and leisure

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Reference no: EM13815521

There are 16 hours daily to be divided between working for day and leisure. Working yields hourly wages of $10. Any hours worked in excess of eight hours are considered overtime, and are compensated at $15 hourly.

1. Produce the budget constraint implied by this scenario, inclusive of clear and complete labels on all axes, lines, and intersections.

2. In the same space, introduce a utility-maximizing agent who is optimally choosing to work 8 hours.

3. In the same space, capture the effect of a program that pays workers a flat $30 for staying after their eight-hour shift to finish up any remaining tasks. if they finish their task, they can leave and keep the full $30 payment. if the task ends up taking longer two hours, they can continue to earn overtime at the regular rate of $15 hourly.

4. Demonstrate, with another indifference curve, what are the expected labor-supply implications of such a policy would be.

Reference no: EM13815521

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