Labour and capital are inputs in production. The labour supply curve is upward sloping. Suppose total factor productivity falls and in response the government considers two policies: P1: Do nothing P2: Force households to work the same number of hours as they did before the fall in productivity. Which of the following statements is correct when comparing P1 to P2? Question 3 options: Consumption is lower under P1 and household utility is higher under P1. Consumption is higher under P1 and household utility is lower under P1. Consumption is lower under P1 and household utility is lower under P1. Consumption is higher under P1 and household utility is higher under P1