1. A consumer chooses consumption levels of three goods 1, 2,3 and faces prices m, and fixed income m. She has utility function: 3 YD Y3)03, u where the are fixed constants. 1,2,3, E3i=IPiYi (a) Assume 2 0, i = z < m. What is the economic interpretation of these assumptions? (5 marks) (b) Derive the Marshallian demands for the three goods. Are the goods Marshallian complements or substitutes? (5 marks) (c) Derive the indirect utility function, and show that it is homogenous of degree zero in prices and income. (5 marks)