Draw the budget constraint

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Consider the optimal choice of labor and leisure discussed in the text. Suppose a consumer works the first8 hours of the day at a wage rate of $10 per hour, but receives an overtime wage rate of $20 for additional time worked.

a) On an optimal choice diagram, draw the budget constraint. (Hint: It is not a straight line.)

b) Draw a set of indifference curves that would make it optimal for him to work 4 hours of overtime each day.

Reference no: EM131247800

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