Assume you win a lottery, and your after-tax gain is $40,000 per year until you retire. You decide to work part time at 32 hours per week in your old job instead of the usual 40 hours per week as a result.
1. Determine the annual income effect on hours worked from this lottery gain based on a 50-week year.
2. Determine the substitution effect on hours worked associated with this lottery win? Discuss.