Gilbert works for a local food company, where he earns w for up to 40 hours of work each week, and then earns 1.5w for any hours worked thereafter (overtime). Lori is an office worker who also earns w for up to 40 hours of work each week. However, Lori does not get any overtime and chooses to work as a delivery worker that pays 0.5w. This means Lori's second job pays an hourly wage that is half less than her primary job. (a) Illustrate the budget line for Gilbert and Lori in one graph. (b) Which person is likely to work up to the point of the "kink" in the graph, and which person is likely to choose a consumption-leisure bundle as far away as possible from the kink?.
Gilbert works for a local food company, where he earns w for up to 40 hours of work each week, and then earns 1.5w for any hours worked thereafter (overtime). Lori is an office worker who also earns w for up to 40 hours of work each week. However, Lori does not get any overtime and chooses to work as a delivery worker that pays 0.5w. This means Lori's second job pays an hourly wage that is half less than her primary job. (a) Illustrate the budget line for Gilbert and Lori in one graph. (b) Which person is likely to work up to the point of the "kink" in the graph, and which person is likely to choose a consumption-leisure bundle as far away as possible from the kink?.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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