The only goods you consume are eggs and wine. On Tuesday, the price of wine increases. On Wednesday, the price of wine returns to its original level, but the price of eggs increases. You are equally happy on Tuesday and Wednesday.
a. Draw a graph showing your budget lines on Monday (before either price changes), Tuesday, and Wednesday, and showing your optimum points.
Label them M, T, and W.
b. True or False: If eggs are a Giffen good, you will certainly consume more eggs on Tuesday than on Monday. Justify your answer by referring to the points on your graph.