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1) Drawing Practice. Drawing income and substitution effects is hard. Diana Rake consumes chocolate and tea. When she thinks about her consumption bundles, she always

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1) Drawing Practice. Drawing income and substitution effects is hard. Diana Rake consumes chocolate and tea. When she thinks about her consumption bundles, she always puts chocolate on the horizontal axis and tea on the vertical axis. Draw the following scenarios using the least number of budget constraints and indifference curves necessary. a. The price of chocolate increases. The price of tea and income remain unchanged. If her preferences are Cobb Douglas, draw a scenario where chocolate is a normal good and identify the income and substitution effects on your graph. b. The price of chocolate increases. The price of tea and income remain unchanged. If her preferences are Cobb Douglas, draw a scenario where chocolate is an inferior, but not Giffen, good and identify the income and substitution effects on your graph. c. The price of chocolate increases. The price of tea and income remain unchanged. If her preferences are Cobb Douglas, draw a scenario where chocolate is a Giffen good and identify the income and substitution effects on your graph. d. The price of chocolate decreases. The price of tea and income remain unchanged. If her preferences are Cobb Douglas, draw a scenario where chocolate is a normal good and identify the income and substitution effects on your graph. e. The price of chocolate decreases. The price of tea and income remain unchanged. If her preferences are Cobb Douglas, draw a scenario where chocolate is an inferior, but not Giffen, good and identify the income and substitution effects on your graph. The price of chocolate decreases. The price of tea and income remain unchanged. If her preferences are Cobb Douglas, draw a scenario where chocolate is a Giffen good and identify the income and substitution effects on your graph. g. The price of chocolate increases. The price of tea and income remain unchanged. If her preferences are perfect complements (one unit of chocolate goes with each cup of tea), draw a scenario where chocolate is a normal good identify the income and substitution effects on your graph

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