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5.8. David has a quasilinear utility function of the form U(x,y)= square root x+y, with associated
marginal utility functions MUx=1/(2 square root x) and MUy=1. A. Derive David's demand curve for
x as a function of the prices, Px and Py. Verify that the demand for x is independent of the level of
income at an interior optimum. B. Derive David's demand curve for y. Is y a normal good? What
happens to the demand for y as Px increases?

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58 David has a quasilinear utility function of the form U.pdf

  • 1. 5.8. David has a quasilinear utility function of the form U(x,y)= square root x+y, with associated marginal utility functions MUx=1/(2 square root x) and MUy=1. A. Derive David's demand curve for x as a function of the prices, Px and Py. Verify that the demand for x is independent of the level of income at an interior optimum. B. Derive David's demand curve for y. Is y a normal good? What happens to the demand for y as Px increases?