quasilinearu

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

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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

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

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

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