1. Suppose Betty spends all her money on coal and movies. You can assume that she has regular preferences, i.e., her indifference curves are strictly convex. Betty allocates her income between movies and coal to maximize utility. Suppose the price of coal is 10 per kg and the price of a movie is 10 and income is 1H0 (whereHis 1).

(c) Price of coal doubles to 20 euro.

Assume that the government was concerned about Betty's loss in utility as a result of the price change and they wanted to restore utility to the previous level, while keeping the price of coal at 20 and price of movies at 10. How would you propose that they do that and what would be the likely effect on Betty's demand for coal after this? Use diagrams to illustrate your answer.