Suppose an individual has a maximum of 24 hours a day () that can be allocated between work () and leisure (). Assume zero non-labour income. Use the graphs to answer all parts of the question and explain each part step by step.

a)Using the first graph to explain how to determine the utility-maximizing outcome for the individual with hourly wage () at $2.5, $5, $7.5, and $10.

b)Assume that leisure is a normal good. Explain how to determine the relative magnitude of the substitution and income effects as hourly wage increases from (i) $2.5 to $5; (ii) $5 to $7.5; and (iii) $7.5 to $10.

c)Using your results from part (a) to help you explain how to plot the labour supply curve in the second graph. What is your observation about the labour supply curve? What is the relationship between your observation and your answers in part (b)?