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5. Suppose Lauren is given two options by her employer. First option: She may
choose her own hours of work and will be paid the relatively low wage rate im-
plied by budget line HW shown in the accompanying diagram. Second option:
She can work exactly HR hours and will be paid the relatively high wage rate
implied by budget line HW,. Which option will she choose? Justify your answer.
Income
H
R
Hours

Top Answer

Lauren will choose the second option to work in the designated hours at a high wage... View the full answer

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