Question $7(20$ points$).$ Danil has well$-$behaved preferences that are consistent with the hypothesis

of diminishing MRS over the number of dance lessons $($x$1)$ and number of pet fish $($x$2).$ He says

that he strictly prefers bundle $(3,1)$ to bundle $(2,2).$ What is the range of values that his MRS can

take at the bundle $(2,2)?$ Explain carefully.

Question $8(20$ points$)$ Draw the budget constraint for Matt who buys $x1$ and $x2$ at prices $p1$ and $p2.$

Matt has income, I, and a gift card, G$,$ that can only be used for the purchase of x$1.$ Carefully

identify ALL key aspects of the budget constraint.