Question: 1. Quasi-linear Utility An individual has utility function U(x, y) = u(x) + y for some function u(x) which also obeys all of our typical

1. Quasi-linear Utility An individual has utility function U(x, y) =

1. Quasi-linear Utility An individual has utility function U(x, y) = u(x) + y for some function u(x) which also obeys all of our typical assumptions for a rational utility function. In reality, though, x is a discrete item, such that the individual's consumption can only be x = 0 or x = 1. For convenience, assume that py = 1. a) Derive a mathematical expression for the range of values for p, that would lead to the individual choosing x = 1. (5 points) b) What is the indirect utility function associated with this individual? (5 points)

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