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a peak at 12 hours per day. If Michelle values only earnings, her indifference curves would be horizontal and she would choose to work 12 hours a day where the profit curve reaches a peak at point a. Now suppose that her utility is a function of her earnings and how hard she has to work so that her indifference curves between profit and leisure have the usual shape. Show that Michelle chooses a point bon the profit constraint where she works fewer than 12 hours a day. Under pressure from the government, the board cuts her profit incentive to one-fourth of her original incentive. To make sure that she can earn as much as before, the board also gives her a salary that is large enough that her salary+¼ profitcurve goes through point b. Show whether Michelle now works more or fewer hours than at point b.
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