A consumer has preferences represented by the utility function U(x₁, x₂) = 10(x²₁+ 2x₁x₂ + x²₂) - 50. For this consumer, goods 1 and 2 are perfect substitutes.

Question

Quizplus · Accepted Answer

The utility function only depends on the quantity of goods 1 and goods 2 consumed, not on their specific characteristics. Therefore, goods 1 and 2 are perfect substitutes in this case.

A Consumer Has Preferences Represented by the Utility Function U(x1

A Consumer Has Preferences Represented by the Utility Function U(x₁