a)

Th

e diagram above shows the income-leisure budget constraints faced by a worker.

i.

Based on this diagram, draw the labour supply curve for this worker, using the

three wages you can see. (Hint: use the y

-intercepts to find the wages.)

(5

marks)

ii.

When the worker is at point B, on indifference curve I

2

, a 50% rise in wage

sees them move to point C, on indifference curve I

3

. Explain why, when the

worker's wage

rises

, they

actually work

fewer

hours at point C.