The graph shows that if real wages were to increase from W1 to W2, the substitution effect for an individual worker outweighs the income effect; therefore, the worker would be willing to increase hours worked for pay from L1 to L2. However, if the real wage increased from W2 to W3, the number of hours offered to work for pay would fall from L2 to L3 since the strength of the income effect now exceeds that of the substitution effect; the utility to be gained from an extra hour of unpaid time is now greater than the utility to be gained from extra income that could be earned by working the extra hour.