1. Stutsky decomposition: A consumer has u = If I? (a) Solve for the consumer's demands for good 1 and 2 as a function of income, M, and prices p1 and p2 using the MRS and the budget line. (b) Suppose M - 80, p1 = 2 and p2 = 1 but then p1 falls to 1. For good 1 compute the substitution and income effects of this price change, and show these effects on a clear complete graph. (c) Does the substitution effect have to be positive for any Cobb Douglas utility function? Explain