Answer
Please see the graph.
Work Step by Step
The original budget constraint was the line labeled $BC_{1}$. When the price of cheese increased from 6 dollars to 10 dollars, the second budget constraint curve was created. (At most, the consumer's maximum consumption of cheese decreases from 500 pounds of cheese to 300 pounds of cheese.)
The equilibrium quantities of cheese and wine shift from $C_{1}$ and $W_{1}$ to $C_{2}$ and $W_{2}$ (since the budget constraint curve shifts from $BC_{1}$ to $BC_{2}$).
The third budget constraint curve is parallel to the second budget constraint curve and intersects the original budget constraint curve at the point $(C_{3}, W_{3}$).
Since the consumer is going to consume more wine (from moving from $(C_{1}, W_{1}$) to $(C_{3}, W_{3}$), this move is the substitution effect. (The consumer is substituting cheese for wine.)
The shift from $(C_{3}, W_{3}$) to $(C_{2}, W_{2}$) is the income effect since the increased price of cheese is the same as an effective decline in income.
