4. 0n the basis of the diagrams ofFigure 2.13, illustrate how an overemployed worker would respond to a. An offer to work as many hours as the worker would like at the going wage. b. Payment of the moonlighting rate for hours of work beyond C. the overtime premium is necessary to get them to work more hours. The person works longer hours even though they are overemployed at the going wage rate because the overtime premium results in a large substitution effect by making the price (opportunity cost, income forgone) of leisure higher only for the overtime hours. The overtime premium has a small income effect, because the budget constraint rotates upward only for the Income Income (a) Overemployed (b) Overtime O O O Leisure T Leisure (time) (time) FIGURE 2.13 Overemployment and Overtime A person may be constrained to work more hours than desired. In this case, they would prefer to work at D, at fewer hours than C, though C is still preferred to not working at all. However, a person could be induced to work more hours, corresponding to point O, if offered a higher wage rate for hours worked after C