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1. (25 points) John purchases 35 Big Macs per month when the price is $1.79. An increase in the price to $1.89 results in John

1. (25 points) John purchases 35 Big Macs per month when the price is $1.79. An increase in the price to $1.89 results in John buying 32 Big Macs per month. John considers Big Macs to be an inferior good. a) Show the income and substitution effects (and their direction) of this price change. b) Derive John's demand curve for Big Macs.

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