Use a labor-leisure choice analysis to answer the following:

a. Vir derives utility from consuming leisure (N) and an all-other-goods (AOG) that he purchases from the wage income earned by working (H). His hourly wages are $w. Using the indifference curve - budget line framework, draw his initial combination of N (hence, the number of hours worked) and AOG.

b. Suppose Vir's hourly wages increase from $w to $w 1 .How would his change the labor-leisure choices? Explain in words AND show graphically, using the same graph used in part a.

c. Decompose the total price effect of the effect of a tax into the substitution and income effect, assuming that Vir treats leisure is an inferior good.

d. Derive the corresponding demand for leisure curve for Vir.

e. Derive the corresponding supply for labor curve for Vir.