Draw a diagram to illustrate the Slutsky decomposition for the case of an increase in p1, with money income m and p2 fixed.

x₁, x₂ are both ordinary goods; x₁ is inferior and x₂ is normal.

In your diagram, clearly indicate:

• The rotation/shifts of the budget line
• the optimal bundle before the price change (Point A)
• the optimal bundle after accounting for only the substitution effect (point B)
• the optimal bundle after accounting for also the income effect (point C)
• the relevant indifference curves