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Your employer decides to institute a new compensation scheme next year. They will pay you $25,000 no matter how much you work. However, since they employ nothing but workers who earn at least double the minimum wage, they will cut wages by 50%.
a. Draw this in terms of a budget constraint (what does it look like?).
b. What will this new compensation scheme do in terms of work effort (such as hours worked per year for the company)?
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