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Homer dislikes working at the local nuclear power plant, but he needs the money so he works 40 hours a week. If he were fired,
Homer dislikes working at the local nuclear power plant, but he needs the money so he works 40 hours a week. If he were fired, he would receive unemployment benefits of $5/hour.Assuming that Mr. Burns knows Homer's best response function (as you drew it above), what wage will his boss Mr. Burns offer Homer? Will Homer accept? If so, how much effort will Homer put in on the job? Show the equilibrium in the figure above and label the amount of effort e* and the wage w*.
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