Which effectsubstitution or income

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Joe Blow's job is 40 hours per week. His employer has voluntary overtime where the wage is 1.5 time the hourly wage. Joe Blow is a utility maximizer .

1. Joe Blow chooses to work 10 hours of overtime per week. Which effect - substitution or income - is larger from Joe Blow in this choice? Explain.

2. Due extraordinary demand for the company's products, the company ups overtime pay to twice the hourly wage for any overtime beyond 10 hours in order to induce more overtime. Joe Blow does not choose to work more overtime than he already works. Which effect - substitution or income - is larger from Joe Blow in this choice? Explain.

3. Draw Joe Blow's budget line and indifference curve that yields his choice in a and b.

Reference no: EM133269084

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