Suppose that there are two goods, X and Y, with pricesPX>0 andPY>0 and a consumer with incomeM0, who has hammock-shaped indifference curves and consumes both goods in positive quantities. Suppose that there is a decrease in the price ofX.

1. (a)Using plain language, provide an answer to the following questions: Will the consumer be better-off or worse-off in response to this change? If we want the consumer to have the same change in welfare, but instead of obtaining it with a decrease in the price ofX, we change her income, should we increase or decrease her income?
2. (b)Provide a graphical representation of the equivalent variation of the decrease in the price ofXin our typical two-dimensional graph representing consumption bundles (withXin the horizontal axis andYin the vertical axis).