Consider the representative consumer in the One-Period Model. Initially, the consumer chooses a bundle (C0,l0). A shock then leads to an increase in the wage rate w. Assume that substitution effect dominates income effect. a) What happens to the consumption and leisure of the consumer after this shock? Explain graphically and intuitively (discuss the income and substitution effects). In order to plot budget constraint, assume >T. b) Briefly explain how a rise in real wage affects labor supply. Consider the representative consumer in the One-Period Model. Initially, the consumer chooses a bundle (C0,l0). A shock then leads to an increase in the wage rate w. Assume that substitution effect dominates income effect. a) What happens to the consumption and leisure of the consumer after this shock? Explain graphically and intuitively (discuss the income and substitution effects). In order to plot budget constraint, assume >T. b) Briefly explain how a rise in real wage affects labor supply