In: Economics
Consider an individual with total hours o t=24 per day. She is paid $10 per hour during the required 8 hours of working each day. She is also willing to work 2 extra hours per day, and gets paid $20 per hour for the overtime working. Explain the preferences of a worker and abusiness owner between overtime premium and straight-time equivalent. Your response should include a discussion of the income effect and the substitution efect.