Call/WhatsApp: +1 914 416 5343

Wage rate

Suppose Lauren is given two options by her employer. First option: she may choose her own hours of work and will be paid the relatively low wage rate implied by budget line HW1 shown in the accompanying diagram. Second option: she can work exactly HR hours and will be paid the relatively high wage rate implied by budge line HW2. Which option will she choose? Please justify your answer in detail.