quasilinearu

quasilinearu - A Quasilinear utility function u(x y = v(x y...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
A Quasilinear utility function u ( x,y )= v ( x )+ y. Given prices, for high enough levels of income both goods are consumed. That is, optimal choice is an interior solution. The optimal choice is the solution to the system: ½ MRS = v 0 ( x p x p y p x x + p y y = m. , Or: x = solution to v 0 ( x p x p y y = m p x x p y Note that y > 0 only if m>p x x . If m is lower, then only good x would
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/23/2008 for the course ECON 3130 taught by Professor Masson during the Spring '06 term at Cornell.

Page1 / 2

quasilinearu - A Quasilinear utility function u(x y = v(x y...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online