Question: Two employees each receive $20.00 hour for labor, however budget cut backs have lowered their wages to $18.00 an hour. Suppose each values free time as much as income, and each experience a diminishing rate of marginal substitution between incoMeand leisure. Workers have the same before and after tax budget constraints at each wage.

Draw each workers opportunity set for each hourly wage.

Both workers consume 14 hours of leisure time, and supply 10 hours of labor. After the wage cut Albert consumes 12 hours of leisure and Sid consumes 16 hours of leisure. Determine the hours of labor each worker supplies at a wage of $18 per hour.

How can you explain the seemingly contradictory results that the workers supply a different number of labor hours??