In the following figure, a new legislation that restricts Angela’s hours of work to 4 hours and sets her minimum pay to 4.5 bushels has moved the allocation outcome from D to F. However, the legislation also states that longer hours are permitted if both parties agree. Based on this information, read the following statements and select the correct two.
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Question

In the following figure, a new legislation that restricts Angela’s hours of work to 4 hours and sets her minimum pay to 4.5 bushels has moved the allocation outcome from D to F. However, the legislation also states that longer hours are permitted if both parties agree. Based on this information, read the following statements and select the correct two.

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Answer

If Angela and Bruno are to share the extra surplus, then any points in triangle HGF can be the final outcome.

Answer

If Bruno can offer a take-it-or-leave-it contract, then D would be the final outcome.

Answer

If Angela can offer a take-it-or-leave-it contract, then H would be the final outcome.

Answer

The overall effect of the legislation is to change the relative bargaining power of Bruno and Angela.

Crowdly

In the following figure, a new legislation that restricts Angela’s hours of work...

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