Explain briefly how indifference curve analysis can be used to derive an individual’s labour-supply schedule.
(i) What significance can be attached to the statement that at some stage leisure becomes a normal good?

(ii) Analyse the effect on the labour-supply schedule of the introduction of an unemployment benefit that pays a
fixed amount of income support only in the event of unemployment (i.e. at zero labour supply).
(iii) Hence, what support does economic theory give to the smooth and continuous upward-sloping labour-supply
schedule as conventionally drawn?