Car wash attendants currently earn $5 per hour and choose to work 50 hours per week. A law has just been passed requiring car washes to pay double wages for any hours in excess of 40 per week. The law does not, however, apply to any other occupations.
a. Explain why car wash attendants must remain on the same indifference curve. What must happen to their basic wage rate?
b. True or False: Car wash attendants will certainly now work more hours than they did previously.