Quasi-Linear Utility and Vertically Parallel Indifference Curves
A key characteristic of indifference curves derived from a quasi-linear utility function is that they are vertical shifts of one another. This can be demonstrated by expressing the indifference curve equation as a function of consumption, , in terms of free time, . For two different utility levels, and , the vertical distance between their respective indifference curves at any given value of is calculated as , which simplifies to the constant value . Since this vertical distance does not depend on , the curves are parallel in the vertical direction.
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Learn After
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