Derive the customer marginal rate of substitution

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Suppose a consumer's preferences can be described by: U = 3•X1•X2 + 25. The consumer faces prices p1 and p2 and has income m, and chooses his most preferred bundle given his budget. The consumer is restricted to non-negative quantities of X1 and X2. a. Derive the equation for the indifference curve that passes through the point (2,4).

b. Derive the customer's marginal rate of substitution at the point (2,4).

c. For prices p1 = 1/3 and p2 = 1 and m = 12, solve for the consumer's optimum choice of X1 and X2.

Reference no: EM1349252

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