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  • MRS in Quasi-Linear Preferences Depends Only on the Non-Linear Good

Measuring Utility Differences with Quasi-Linear Preferences

With quasi-linear preferences, it becomes possible to quantify the difference in utility between two different allocations using the units of the 'linear' good (in this case, grain). Because the Marginal Rate of Substitution is independent of grain, the vertical distance between any two indifference curves remains constant. This unique property allows for the preference for a bundle on a higher curve over a bundle on a lower one to be expressed as a concrete quantity of that good. For instance, stating that one allocation is preferred over another by an amount equivalent to 17 bushels of grain is a valid utility comparison under this assumption.

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