Question: 6. (10 marks) Suppose there is a utility function: u = In x, +=In x2 +=In x3 and the budget constraint:P1X1 + P2x2 + P3X3

6. (10 marks) Suppose there is a utility function: u =

6. (10 marks) Suppose there is a utility function: u = In x, +=In x2 +=In x3 and the budget constraint:P1X1 + P2x2 + P3X3 = M. Find the comparative statics term Ox1 0x2 0x3 OM OM OM

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The status rule: We tend to have more confidence in information presented by someone who has a relatively high status and rank in society than by someone who hasnt.

The spatial rule: The closer spatial proximity we have to an event, the more importance we will attach to it.

The visual rule: If we observe an event with our own eyes, we will attach more weight to it than if someone else had described it to us.