Suppose a quasi-linear preference is represented by a utility function of the form u(x)=x1+(x2,...,xn) . Show that

Suppose a quasi-linear preference is represented by a utility function of the form u(x)=x1+ϕ(x2,...,xn). Show that the Hicksian demand functions for goods 2,...,n are independent of utility *WITHOUT* assuming this function is differentiable, i.e. use the definition of quasilinear preference to prove.

Answer rating: 100% (QA)

Ans 1 ux1 x2 r1r1 x1 r11x 2 0 The intuition here is that having a higher reference point is bad Higher r1 is associated to a lower level of utility 2 ... View the full answer