Suppose a consumer spends her income on lobster and frozen pizza. Assume that the consumer has an income of $60, the price of lobster is $6, and the price of frozen pizza is $6.
a. Using indifference curves and budget constraints, show the income and substitution effects associated with a decrease in the price of frozen pizza. Assume frozen pizza is an inferior good and lobster is a normal good.
b. Using indifference curves and budget constraints, show the income and substitution effects associated with a decrease in the price of frozen pizza. Assume frozen pizza is a Giffen good and lobster is a normal good.

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The Answer of Suppose a consumer spends her income on lobster and frozen pizza. Assume that the consumer has an income of $60, the price of lobster is $6, and the price of frozen pizza is $6.
a. Using indifference curves and budget constraints, show the income and substitution effects associated with a decrease in the price of frozen pizza. Assume frozen pizza is an inferior good and lobster is a normal good.
b. Using indifference curves and budget constraints, show the income and substitution effects associated with a decrease in the price of frozen pizza. Assume frozen pizza is a Giffen good and lobster is a normal good.

Suppose a Consumer Spends Her Income on Lobster and Frozen