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1. Rick purchases two goods, food and clothing. He has a diminishing marginal rate of substitution of food for clothing. Let 1 denote the amount
1. Rick purchases two goods, food and clothing. He has a diminishing marginal rate of substitution of food for clothing. Let 1 denote the amount of food consumed and y the amount of clothing. Suppose the price of food increases from Rel to H2. On a clearl},r labeled graph, illustrate the income and substitution effects of the price change on the consumption of food. Do so for each of the following cases: a. lCase 1: Food is a normal good. b. lCase 2: The income elasticit},r of demand for food is zero. c. Case 3: Food is an inferior good, but not a Giffen good. d. Case 4: Food is a Giffen good
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