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Jerry consumes two goods: tomatoes and barley. Barley is a Giffen good for him. Now suppose the market price of barley decreases. a) How would

Jerry consumes two goods: tomatoes and barley. Barley is a Giffen good for him. Now suppose the market price of barley decreases.

a) How would that affect the best feasible bundle of tomatoes and barley? Illustrate with a graph and explain briefly.

b) Illustrate the substitution and income effects with a graph. Explain the figure.

c) Is barley an inferior or a normal good? Explain with the help of the figure you drew for part b).

d) Can a Giffen good ever be a normal good? Why or why not?

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