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a. Draw a neat and clear diagram and show the decomposition of total effect into substitution and income effects for a fall in wages when

a. Draw a neat and clear diagram and show the decomposition of total effect into substitution and income effects for a fall in wages when leisure is an inferior good (with leisure on the horizontal axis and consumption on the vertical axis). (6 points)

b. Does the income effect raise, or lower leisure hours? (2 points)

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