Consider Kelly, a randomly selected labor force The following indifference curves and income constraints represent her preferences and income line, respectively a)Among ordered pairs O , P , Q , and R , identify the ordered pair that represent the optimal time allocation towards leisure and work when wages are set at w 0 Also, identify the ordered pair that represent the optimal time allocation towards leisure and work when wages are set at w 1 Briefly explain your answer (5 points) b)Which of the above wage levels is greater in nominal value w 0 or w 1 Briefly explain your answer (5 points) c)After being hired for a while under w 0 , let us assume that her employer asks Kelly to work only h 1 hours per week, which leaves her with L 1 hours of leisure How much should her employer pay Kelly to retain her at the firm w 0 , w 1 , or an amount between those two wage levels Briefly explain your answer (10 points)

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Question: . Consider Kelly, a randomly selected labor force. The following indifference curves and income constraints represent her preferences and income line, respectively. a)Among ordered pairs

. Consider Kelly, a randomly selected labor force. The following indifference curves and income constraints represent her preferences and income line, respectively.

a)Among ordered pairs O, P, Q, and R, identify the ordered pair that represent the optimal time allocation towards leisure and work when wages are set at w₀. Also, identify the ordered pair that represent the optimal time allocation towards leisure and work when wages are set at w₁. Briefly explain your answer. (5 points)

b)Which of the above wage levels is greater in nominal value: w₀ or w₁? Briefly explain your answer. (5 points)

c)After being hired for a while under w₀, let us assume that her employer asks Kelly to work only h₁ hours per week, which leaves her with L₁ hours of leisure. How much should her employer pay Kelly to retain her at the firm: w₀, w₁, or an amount between those two wage levels? Briefly explain your answer. (10 points)

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