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 the 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.

*can use sample numbers for prices and income and quantity consumed to draw the graph*