We compensate her by returning enough income so that she can afford her original bundle at the higher price, placing her on the green compensated budget. The shaded region below her original budget represents bundles less desirable than A so we can rule out that part of the compensated budget, as before.

    It is clear that if we remove the income effect she will purchase less grain than she did before the price change. Even for Giffen goods, the substitution effect leads to reduced consumption in the face of a price increase. As we can see to the right, it is the huge income effect that leads to increased consumption.

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