Question: Suppose there are three goods in the world: x1 , x2 and x3. A: On a 3-dimensional graph, illustrate your budget constraint when your economic

Suppose there are three goods in the world: x1 , x2 and x3.
A: On a 3-dimensional graph, illustrate your budget constraint when your economic circumstances are defined by p1 = 2, p2 = 6, p3 = 5 and I = 120. Carefully label intercepts.
(a)What is your of x1 in terms of x2? What is your of x2 in terms of x3?
(b) Illustrate how your graph changes if I falls to $60. Does your answer to (a) change?
(c) Illustrate how your graph changes if instead p1 rises to $4. Does your answer to part (a) change?
B:
Write down the equation that represents your picture in 2.4A. Then suppose that a new good x4 is invented and priced at $1. How does your equation change? Why is it difficult to represent this new set of economic circumstances graphically?

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