PROBLEMS 5.1. Figure 5.2(a) shows a consumer's optimal choices of food and clothing for three values of weekly income: I; = $40, I, = $68, and I = $92. Figure 5.2(b) illustrates how the consumer's demand curve for food shifts as income changes. Draw three demand curves for clothing (one for each level of income) to illustrate how changes in income affect the consumer's purchases of clothing. 5.2. Use the income consumption curve in Figure 5.2(a) to draw the Engel curve for clothing, assuming the price of food is $2 and the price of clothing is $4. 5.3. Show that the following statements are true: a. An inferior good has a negative income elasticity of demand. b. A good whose income elasticity of demand is negative will be an inferior good. O : 5.1 OPTIMAL CHOICE AND [ X PROBLEMS | Microeconomics, E . . . Income consumption curve C y, clothing 11 B U 3 8 ... A U2 5 . . . :U1 BL, BL:(1 = $40) (I = $68) BL3 (1 = $92) 10 : 18 : 24 x, units of food (a) 168 O : 5.1 OPTIMAL CHOICE AND [ X PROBLEMS | Microeconomics, E . . . Income consumption curve C y, clothing 11 B U 3 8 ... A U2 5 . . . :U1 BL, BL:(1 = $40) (I = $68) BL3 (1 = $92) 10 : 18 : 24 x, units of food (a) 168