1.     Suppose that the utility function for goods x1 and
x2 is given by
u(x1, x2)=
x1x2+x2.

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Question: 1.     Suppose that the utility function for goods x1 and x2 is given by u(x1…
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a.           Does
it have diminishing marginal rate of substitution? Remember, for
this to be the case, the following condition has to be
satisfied:

u11u22-2u12u1u2+u22u12<0

b. Is it
homothetic?

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