a. What is an Inferior good? Sketch an Engel curve for inferior goods and clearly label the two axes. b. Briefly explain why demand may increase as price increases? (Hint: think about substitution and income effects.) c. What is the relationship between Inferior and Giffen goods? Use a Slutsky equation to justify your statement. d. Some people may work less when their wage rates go up. Why is it the case? (Hint: think about substitution effect and endowment income effect).

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