Which of the following functional forms for utility suggests the greatest substitution effect when starting at the point where P_X = P_Y A) U = min (X, Y) B) U = X + Y C) U = X^1/2Y^1/2 D) U = X^1/4Y^3/4

Question

Quizplus · Accepted Answer

The utility function U = X + Y represents perfect substitutes, meaning the consumer is willing to substitute one good for another at a constant rate, leading to the greatest substitution effect.

Which of the Following Functional Forms for Utility Suggests the Greatest