Suppose that Grover consumes two goods, cookies and milk. Grovers income expansion path is shown in the

Question:

Suppose that Grover consumes two goods, cookies and milk. Grover€™s income expansion path is shown in the diagram below. Use the information in the diagram to explain whether each of the statements below is true or false. Provide an explanation for each answer.

a. At low levels of income, both cookies and milk are normal goods for Grover.
b. As Grover€™s income grows, eventually cookies become an inferior good.
c. Draw, intuitively, the Engel curve for Grover€™s consumption of milk at various incomes.
d. Draw, intuitively, the Engel curve for Grover€™s consumption of cookies at various incomes.