1. Jacqueline divides her income between coffee and croissants

(both of which are normal goods). An early frost in Brazil causes a large increase in the price of coffee in France.

a. Show how this early frost might affect Jacqueline’s budget constraint.

b. Show how this early frost might affect Jacqueline’s optimal consumption bundle assuming that the substitution effect outweighs the income effect for croissants.

c. Show how this early frost might affect Jacqueline’s optimal consumption bundle assuming that the income effect outweighs the substitution effect for croissants.