You consume two goods, X and Y . On Tuesday, your income falls. On Wednesday, your income returns to its Monday level, but the price of X rises. On Wednesday, you are exactly as happy as on Tuesday.
a) Draw an indifference curve diagram to illustrate your optimum points on Monday, Tuesday and Wednesday. Label them M, T and W.
b) Use your diagram to show that if X is a Giffen good, it must be inferior.