4. Assume Dizzy buys a Good X and a composite commodity Z. His income is $120. the price of Z is $1 and the price of X is $4. Draw and label Dizzy's budget line and his utility maximizing indifference curve with consumption of X = 12. Now assume the price of X rises to $6. Assuming X is a normal good. draw in and label the income and substitution effects that determine the change in the quantity demanded of X given this increase in the price. Note the income and substitution effects on the graph. Be sure to explain whether each effect (income and substitution) is to the light or left with its relative magnitude. Z b. Based on the mfmmation above. derive Dizzfs ordinary demand (do) and compensated demand (dc) curves for X on the graph below (Label each axis carefully.) Which one is atter? {Note that a compensated demand curve ignores the income eeet ofaprice change. It oni' measnres the snbstimrfon eeer nubile an ordmmjr demand ems'e measures me rotaf 352:ch