What Is the Income Effect? How It Occurs and Example

Non-backward-bending labor supply curve. Consider an economy populated by 100 individuals who have identical preferences over consumption and leisure. In this economy, the aggregate labor supply curve is upward-sloping. For simplicity, suppose that throughout this question, the labor tax rate is zero.a. For such a labor supply curve, how does the substitution effect compare with the income effect?b. Using indifference curves and budget constraints, show how such a labor supply curve arises.