Demand with quasilinear preferences

Summary

Quasilinear preferences

• \(u\left( x_1,x_2 \right)=v\left( x_1 \right)+x_2\) where \(v\) is strictly concave
• With quasilinear preferences, the income offer curve and the Engel curve are vertical for \(m\) large enough that \(x_2>0\) .
• An increase in income has no effect on the demand for good 1.