Solution-Draw the budget constraint

Draw the budget constraint

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Reference no: EM131423778

Consider the optimal choice of labor and leisure discussed in class and the text. Suppose a consumer works the first 8 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: EM131423778

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Draw the budget constraint

Reference no: EM131423778

Reference no: EM131423778

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