Question 1 (10 Total Marks) Income and Substitution Effect of a Price Change Y I/Py F G UL Uo g' I/PXO I/PX1 X In the above diagram, initially PX=Pxo, and the consumer is in equilibrium at E. Suppose Px falls from Pxo to PX1. If gg' is the artificial budget line created using Hick's method of decomposition: 1) What is the pure Substitution Effect? (Select one from below.) (1 mark) a) E to F b) F to E C F to G d) G to F e E to G f) G to E2) What is the Income Effect? (Select one from below.) (1 mark) a) E to F b) F to E c) F to G d) G to F e) E to G f) G to E 3) Are good X and good Y substitutes, or complements and why? (2 marks) 4) 15 good X normal, or inferior and why? (2 marks)