In 2002, a French law went into effect that cut the standard workweek from 39 to 35 hours (workers got paid for 39 hours even though they worked 35) while at the same time prohibiting overtime hours from being worked. (Overtime in France is paid at 25 percent above the normal wage rate).
a. Draw the old budget constraint, showing the overtime premium after 39 hours of work.
b. Draw the new budget constraint.
c. Analyze which workers in France are better off under the 2002 law. Are any worse off? Explain.
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