Essay
Jezz has the quasi log-linear utility function
U(q1,q2)= q1 + 2ln(q2)
Jezz has an income of $100 and faces prices p1 = p2 = 20.
a.What is the marginal rate of substitution for this utility function?
b.Solve for Jezz's optimal bundle.
c.Suppose Jezz's income falls to $20.What will happen to his optimal bundle?
Is the MRS = MRT at the optimal bundle?
Correct Answer:
Verified
a.MRS = U1/U2 = 1/(2/q2)= .5q2
b.Set MRS = M...View Answer
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Correct Answer:
Verified
b.Set MRS = M...
View Answer
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