Problem
In the lecture we have shown the compensating variation and equivalent variation when price of good 1 increases. Draw two diagrams in the commodity bundle plane (x1-x2) to show the compensating variation and equivalent variation when price of good 2 decreases. Label the two axes and all curves properly. Show all directions of the movement of consumption bundles.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.