Problem
1. Suppose that the indifference curves between consumption and leisure are concave to the origin. How many hours will a person allocate to leisure activities?
2. Suppose that the price of goods purchased in the marketplace rises. What is the impact of this price increase on the worker's reservation wage, on the worker's probability of entering the labor force, and on hours of work?
3. What happens to a worker's desired hours of work if employers pay an overtime premium equal to "time and a half'(that is, 1 .5 times the straight-time wage) for any hours worked in excess of 40 hours? What would happen to hours of work if the overtime premium were raised to double the straight-time wage?