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trate how this works. 8. Suppose that a consumer can earn a higher wage rate for working overtime. That is, for the first q hours the consumer works, he or she receives a real wage rate of w, and for hours worked more than q he or she receives w2, where w,>w Suppose that the consumer pays no taxes and receives no nonwage income, and he or she is free to choose hours of work a. Draw the consumers budget constraint, and show his or her optimal choice of consump- b. Show that the consumer would never work q hours, or anything very close to q hours c. Determine what happens if the overtime wage rate, w, increases. Explain your results in tion and leisure. Explain the intuition behind this. terms of income and substitution effects. You will need to consider the cases of a worker who initially works overtime and a worker who initially does not work overtime
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Gue8. Suppose that a Consumeč Can ect η a @tim al choice クcon sum(Hon and leisuee. The indeyrerence curvc< toucher the steep poction the budget constecint, todicalinq . Jok o that it is also possible to deaw the indide*ence cuevc suth +ha Indlvidual chooses not to oo* Graph-1 uo ould touch the ylate po constさcunt the budge b) ד e kink In the budget line means thaị it is impossible 애 the 2dHeeence cuさveto meet at exactly l-9 Cat 1-9 theindivídual ω。čkr I hou*i It would be like tyin to make the Sustace ball touch the Coenebヅa box Initially ω0dEr ovee+ime. The analysis awaðe andaさd Conslcunl ^ises and -^he individuawotks mose id the substitution ejject the uwage inceease dominaler Ihe incomc ejtect. In the second g*aph, *he individua1 înitially doe, no+ «ook ovetime.In +his (ase the tnce ease in the overtime waye inaute, the individual to Su, i te h +。さadically rnćexase her Laboe Supply Gitaph-31

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