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Boxes Ltd. produces corrugated paper containers at

a small plant in Sunrise Beach, Texas.


Beach is a retirement community with an aging

population, and over the past decade the size of its

working population has shrunk. In 2012, this labor

shortage hampered Boxes Ltd.'s ability to hire

enough workers to meet its growing demand and

production targets. This is despite the fact that it

pays $10 per hour—almost 30 percent more than

the local average—to its workers.

Last year, Boxes Ltd. hired a new manager who

instituted an overtime wage plan at the firm. Under

her plan, workers earn $10 per hour for the first

eight hours worked each day, and $15 per hour for

each hour worked in a day in excess of eight hours.

This plan eliminated the firm's problems, as the

firm's production levels and profits are up by 20

percent this year.

Why did the new manager institute the overtime

plan instead of simply raising the wage rate in an

attempt to attract more workers to the firm. Please explain using equilibrium curve with earnings on y axis and hours of work on the x-axis.

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