Question: With a Utility U( x1 , x2 ) = x1 3 x2 1 , x1 and x2 are the quantity of good 1 and good

  1. With a Utility U(x1, x2) = x13x21, x1 and x2 are the quantity of good 1 and good 2, measure the marginal rate of substitution (MRS) in functional form. What is MRS(1,1)?
  2. Following 1, If p1 (price of good 1) and p2 (price of good 2) are $40 and $20 with a budget of $800, what is the optimum consumption bundle (consumer's choice) if the budget must be finished with no saving?

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