Answer to Question #241726 in Microeconomics for Boss

Question

True or False?

Tastes for perfect complements are both homothetic and quasilinear.

Answer 1

Solution:

False.

Perfect complements are only homothetic and are not quasilinear.

Tastes are quasilinear if the MRS between the good and the other good depends only on the absolute quantity of the quasilinear good and is thus independent of how much the other good a consumer has in his consumption bundle. This is not the case with perfect complements since they are not independent of each other.

Only the tastes for perfect substitutes are both homothetic and quasilinear.