Neville's passion is fine wine.

4. Neville's passion is fine wine. When the prices of all other goods are fxed at current levels, O Neville's demand function for highquality claret is q = 0.02m - 2p, where m is his income, p is the price of claret (in British pounds), and q is the number of bottles of claret that he demands. Neville's income is 10,000 pounds, and the price of a bottle of suitable claret is 40 pounds. (25 points) (a) How many bottles of claret will Neville buy? (b) If the price of claret rose to 50 pounds, how much income would Neville have to have in order to be exactly able to afford the amount of claret and the amount of other goods that he bought before the price change? At this income, and a price of 50 pounds, how many bottles would Neville buy? (c) At his original income of 10,000 and a price of 50, how much claret would Neville demand? (d) When the price of claret rose from 40 to 50, the number of bottles that Neville demanded decreased by . The substitution effect (increased, reduced) _his demand by_ bottles and the income effect (increased, reduced)_his demand by _