Answer to Question #241727 in Microeconomics for Boss

Question

True or False?

There are no quasilinear tastes that have elasticity of substitution equal to 1 everywhere.

Answer 1

Solution:

The statement is Tue 

Quasilinear implies that the MRS does not change along any vertical line originating from the horizontal axis or along any horizontal line originating from the vertical axis.

In order for tastes to have constant elasticity of substitution equal to 1 everywhere, they have to fall under constant elasticity of substitution utility functions, as with perfect substitutes.