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In terms of the salary-shirking trade-off, show the opportunity set for a manager with a guaranteed fixed salary of 100,000 per year. Assuming traditional smooth
In terms of the salary-shirking trade-off, show the opportunity set for a manager with a guaranteed fixed salary of 100,000 per year. Assuming traditional smooth convex indifference curves, explain how the manager's optimal mix of salary and leisure (i.e. shirking) are obtained. You may assume a working day of 8 hours. (8 marks)
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