2. Using an indifference curve/budget constraint diagram, illustrate the compensating and equivalent variation of a price increase of an inferior good. Using this diagram: a. b. Derive a Marshallian demand curve. Derive a compensated demand curve holding utility constant at its original level i.e. before the price increase (compensating variation). Derive a compensated demand curve holding utility constant at its new level i.e. after the price increase (equivalent variation). . Compare and contrast the three monetary measures of welfare for a price decrease of an inferior good i.e. EV, CV and ACS. Compare the relative magnitude of EV and CV with your answers to question 1