Question 4 [6 marks] This question follows directly from question 3 above. The diagram is exactly the same as the one above, except that a "compensated budget line" BL3 has been added. Answer the questions below. Consumption 1200 BLZ BLE BL: D 1CZ V1 TCA 19 16 24 Hours of free time a) Explain how the movement from point A to point D (which describes an decrease in the hours of free time, and thus an increase in the number of hours worked, as a result of an increase in the wage rate) can be decomposed into an income and substitution effect. [5] b) Which effect dominates? [1]