Jezz Has the Quasi Log-Linear Utility Function

question 24

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?

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Definitions:

Dissociation

A mental process involving a lack of connection in a person's thoughts, memory, and sense of identity.

Sodium Ion

An essential electrolyte in the body that helps regulate water balance, nerve impulses, and muscle function.

Dissociation

A mental process involving a disconnection between thoughts, identity, consciousness, and memory.

Sodium Chloride

A chemical compound more commonly known as table salt, essential for organism's fluid balance and nerve transmission.