1. Problem statement. You asked for drawings of the Income Consumption Curve (ICC) in three cases and a full decomposition of the price effect for a normal good, with clear labels and explanations so you can reproduce the graphs by hand or in a plotting tool. 2. General setup and conventions for all sketches. Axes: horizontal axis = Quantity of Good X, vertical axis = Quantity of Good Y. Draw budget lines as straight lines and indifference curves as smooth convex curves with tangency points where optimal consumption occurs. Label the initial budget line as BL1 and the expanded (higher income) budget line as BL2 when showing income changes. Mark points of tangency as $A$, $B$, $C$ etc. and label quantities on the X-axis as $X_a$, $X_b$, $X_c$ when needed. 3. Graph 2(a)(i): Both X and Y are Normal Goods. Step 1: Draw coordinate axes and an initial budget line BL1 that is tangent to an indifference curve IC1 at a point $A$ located in the lower-left region of your graph. Step 2: Increase income by shifting the budget line outwards in a parallel fashion to BL2; draw a higher indifference curve IC2 tangent to BL2 at point $B$ placed up and to the right of $A$. Step 3: Draw a smooth upward-sloping curve through $A$ and $B$; this curve is the ICC connecting the tangency points. Explanation: "As income increases, the consumption of both goods increases. Therefore, the ICC is an upward-sloping curve from the origin." 4. Graph 2(a)(ii): Good X is Normal, Good Y is Inferior. Step 1: Draw BL1 tangent to IC1 at point $A$. Step 2: Shift the budget line outwards in parallel to BL2 to represent higher income and draw a new tangency at point $B$ that is to the right of $A$ (more $X$) but lower than $A$ (less $Y$). Step 3: Connect $A$ and $B$ with a smooth curve that overall slopes upward but bends toward the X-axis (i.e., it rises in $X$ but falls or flattens in $Y$). Explanation: "As income increases, consumption of the normal good (X) rises, but consumption of the inferior good (Y) falls. The ICC therefore slopes upward but is biased towards the X-axis." 5. Graph 2(a)(iii): Good X is Inferior, Good Y is Normal. Step 1: Draw BL1 tangent to IC1 at point $A$. Step 2: Shift the budget line outwards in parallel to BL2 to represent higher income and draw the new tangency at point $B$ that is above $A$ (more $Y$) but to the left of $A$ (less $X$). Step 3: Connect $A$ and $B$ with a smooth curve that overall slopes upward but bends toward the Y-axis (i.e., it rises in $Y$ while $X$ falls). Explanation: "As income increases, consumption of the normal good (Y) rises, but consumption of the inferior good (X) falls. The ICC therefore slopes upward but is biased towards the Y-axis." 6. Graph 2(b): Decomposing the Price Effect for a Normal Good (step-by-step sketch). Initial equilibrium: Step 1: Draw axes, and draw the initial budget line AB (label the endpoints on the axes) and an indifference curve IC1 tangent to AB at point $A$. Step 2: Mark the initial quantity of X as $X_a$ at point $A$. Price change and final equilibrium: Step 3: Show a fall in the price of good X by rotating the budget line outward around the Y-intercept (pivot from the Y-axis) to the new budget line AB1. Step 4: Draw a higher indifference curve IC2 tangent to AB1 at the final equilibrium point $C$, and label the final quantity of X as $X_c$. Decomposition into substitution and income effects: Step 5: Construct a hypothetical (compensated) budget line A\'B\' that is parallel to the new budget line AB1 but tangent to the original indifference curve IC1. Step 6: The tangency of A\'B\' and IC1 is point $B$; label the quantity at $B$ as $X_b$. Step 7: Draw an arrow from $A$ to $B$ and label it "SUBSTITUTION EFFECT". Step 8: Draw an arrow from $B$ to $C$ and label it "INCOME EFFECT". Step 9: Draw an arrow from $A$ to $C$ and label it "PRICE EFFECT" (this is the total effect and equals the vector sum $A \rightarrow B$ plus $B \rightarrow C$). Key labels and shapes to include: - Label the indifference curves IC1 (lower) and IC2 (higher). - Show AB as the initial budget line, AB1 as the post-price-change budget line, and A\'B\' as the hypothetical compensated line. - Use dashed style for A\'B\' to distinguish it from actual budget lines. Summary to place next to the graph: "The total Price Effect ($A \rightarrow C$) is decomposed into the Substitution Effect ($A \rightarrow B$), which always leads to more consumption of the cheaper good, and the Income Effect ($B \rightarrow C$), which for a normal good leads to a further increase in consumption." 7. Practical drawing tips so your sketches are clear and exam-ready. - Use smooth convex indifference curves and ensure tangency with budget lines (matching slopes at tangency). - Keep BL2 parallel to BL1 when showing pure income changes, and pivot around the appropriate intercept for price changes. - Clearly mark and label points $A$, $B$, $C$, $X_a$, $X_b$, $X_c$, BL1, BL2, AB1, A\'B\', IC1, and IC2. - Use dashed lines and arrows for the compensated budget and for the substitution/income/price effect vectors respectively. 8. Final note. I cannot produce a bitmap image here, but the above gives precise, step-by-step drawing instructions and all required labels so you can reproduce the three ICC graphs and the price-effect decomposition accurately by hand or in any plotting tool.