Jezz Has the Quasi Log-Linear Utility Function

question 54

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:

Neo-Freudian

Psychologists who were influenced by Freud's theories but developed their own distinct psychological theories and concepts.

Jung

Refers to Carl Jung, a Swiss psychiatrist and psychoanalyst who founded analytical psychology and introduced concepts like archetypes and the collective unconscious.

Denial

A psychological defense mechanism where an individual refuses to accept reality or facts, thus avoiding a psychologically uncomfortable truth.

Terminal Illness

A terminal illness is a disease or condition that is considered incurable and is likely to lead to death.