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Problem:
(a) Explain with the help of a diagram, the effect on a consumer's equilibrium, of an increase in the price of commodity X while the consumer's money income and price of commodity Y remains unchanged.
(b) If the government intends to restore the consumer's current welfare to its original level, illustrate how would the process of income compensation proceed to realise that objective.
The market demand for brand X has been estimated as Qx=1500-3Px-0.05I-2.5Py+7.5Pz
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