Question: Question 4 Sam consumes only green eggs and ham. Ham is an inferior good for Sam. One day the price of green eggs goes up.

Question 4 Sam consumes only green eggs and ham. Ham is

Question 4 Sam consumes only green eggs and ham. Ham is an inferior good for Sam. One day the price of green eggs goes up. a. Draw Sam's old and new optimum bundles, and show the Hicks substitution effect and the income effect of the price increase. How does your graph reflect the fact that ham is an inferior good? b. Is it true or false that when the price of green eggs goes up, Sam certainly buys more ham than before? Justify your answer carefully by considering the directions of both the substitution and the income effect

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