Problem
Company X has for some time hired skilled technicians on one-year contracts to work at a remote location. It offers a $10,000 signing bonus and an hourly wage rate of $20 per hour. Company Y now enters the market and offers no signing bonus but offers an hourly wage of $25. Both companies want to attract workers who will work longer than 2,000 hours during the year (all hours are paid at the straight-time wage rate given above).
a. First, suppose that workers receive offers from both companies; on the same graph, draw the income-household time ("budget") constraints for the coming year under both offers. (Clearly label which is Company X and which is Y.)
b. Second, consider a worker for Company X who chose to work 2,500 hours last year. Suppose that her contract is up and that she now has offers from both Company X and Company Y. Can we tell which offer she will choose, assuming her preferences for income and household time have not changed? Explain (or demonstrate). If she changes companies, will she continue to work 2,500 hours or will she increase hours or reduce them? Explain fully.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.