Which of the following utility functions has the same MRS as U(q₁,q₂)= q₁ q₂? A)q₁^1/2q₂^1/2 B)q₁+ q₂ C)q₁^1/2+ q₂^1/2 D)(q₁^1/2+ q₁^1/2)²

Question

Quizplus · Accepted Answer

The MRS (marginal rate of substitution) for U(q1, q2) = q1 q2 is q2/q1. The utility function q1^(1/2) q2^(1/2) also has the same MRS, as it is a monotonic transformation of the original function.

Which of the Following Utility Functions Has the Same MRS