If two goods,"x" and "y",are perfect substitutes,then which of the following best represents the utility function for the two goods? A) U = x + y B) U = x ∗ y C) U = x² + y² D) Any of the above.

Question

Quizplus · Accepted Answer

Since the goods are perfect substitutes, their marginal utility is the same and utility is simply the sum of the quantities consumed of each good. Therefore, the utility function would be U = x + y.

If Two Goods,"x" and "Y",are Perfect Substitutes,then Which of the Following