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Ive been set this question and im not sure where to start Using consumer theory, consider...

Ive been set this question and im not sure where to start

Using consumer theory, consider how households may respond to having their budgets squeezed as a result of the increase in prices of food, housing and energy. Make particular reference to and isolate any substitution and income effects (hint: you could make use of composite goods). A good place to start is to consider what type of goods these goods/services are, for example, whether they are normal or inferior goods; luxuries or necessities; and consider how your answer may vary with different income levels.

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