In Figure 7.6 the reduction in the cost of fringe benefits resulted in an increase in the amount of fringe benefits and a reduction in the wage income received.

Figure 7.6

Redraw the worker?s indifference map to demonstrate a circumstance in which fringe benefits would not go up by as much, but wage income would increase. Explain the difference between the two situations.

Transcribed Image Text:

W. W, 13 12 Fo F, Fringe benefits || || Wages