Steve has the utility function U(c1, c2) = c1^1/2 + c2^1/2 where c1 is his consumption in period 1 and c2 is his consumption in period 2. He will earn 100 units of the consumption good in period 1 and 100 units of the consumption good in period 2. He can borrow or lend at an interest rate of 10%.

What is the equation that describes Steve's budget constraint and explain how you find it.

If Steve neither borrows nor lends, what will be his marginal rate of substitution between current and future consumption? Show your calculation.

If Steve does the optimal amount of borrowing or saving, what will be the ratio of his period 2 consumption to his period 1 consumption? Explain your answer.