Suppose the NDP come into power and decided to mandate that films pay a 50% over-time premium on hours worked beyond 8 hours a day. In response many employers cut hourly pay so that if total hours worked remain the same their wage bill will not change.
1. Draw the original budget constrain before an overtime premium was required and compare it to the new budget constraint with the 50% overtime premium for work beyond 8 hours.
2. Suppose that an employer initially paid $11 per hour and workers had a 10 hour workday. What hourly base wage will the employer offer so that their wage bill for a 10 hour workday will remain the same with the 50% overtime premium.
3. Will employees who used to work 10 hours per day before the overtime premium want to work more or less than 10 hours in the new environment?