1. Consider two individuals with endowments of T=60 hours (per week) of leisure, non-labor income of Y, and a wage of $7.50 per hour. At this wage, assume that workers are constrained by their employers to work 40 hours per week, or not at all.
   1. On a carefully labelled diagram, show the equilibrium for a worker for whom 40 hours is the optimum labor supply and a worker who would like to work 20 hours, but still prefers the 40-hour week to not working. Compare the marginal rates of substitution for these individuals at 40 hours per week.
   2. The average part-time wage is $7 per hour, in contrast to $7.50 wage for full-time workers. Using the above model, provide an explanation for this difference in wage rates.

. Consider two individuals with endowments of T=60 hours (per week) of leisure, non- labor income of Y, and a wage of $7.50 per hour. At this wage, assume that workers are constrained by their employers to work 40 hours per week, or not at all. a. On a carefully labelled diagram, show the equilibrium for a worker for whom 40 hours is the optimum labor supply and a worker who would like to work 20 hours, but still prefers the 40-hour week to not working. Compare the marginal rates of substitution for these individuals at 40 hours per week. b. The average part-time wage is $7 per hour, in contrast to $7.50 wage for full-time workers. Using the above model, provide an explanation for this difference in wage rates