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.