Chive Parmesan is a maximizing worker with preferences U=FZ has non-labour income of $64 and is paid a wage of $4 per hour. If he joins a union, he will be paid a wage of $16 per hour.
a. Provide a labelled Indifference Curve diagram and supplementary calculations to illustrate and quantify the Income and Substitution Effects for this wage increase. Calculate and show Bundles "A", "B" and "C", the slopes and intercepts for the Budget Lines and the Compensated Budget Line.
b. The maximum membership fee that Chive would pay to join this union is _______________.