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1.1 Suppose that the MRS of consuming (x1, x2) is x2/x1, and that p1, p2 >...

1.1 Suppose that the MRS of consuming (x1, x2) is x2/x1,

and that p1, p2 > 0.
Find out (p1, p2) such that (x1, x2) = (0.2, 0.8) is the optimal bundle chosen by the

consumer.

1.2 Show that as long as p1, p2 > 0, the optimal bundle is always interior, i.e., it is

impossible to obtain corner solution with the MRS being x2/x1.

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