Question: (a) Explain the concept of quasilinearity and its implications for consumer demands.

(b) Jacob and Esau both consume bread b and honey h. Jacob’s preferences are represented by utility function \(u=b+\ln \left( h \right)\).Esau’s preferences are represented by utility function \(u=h\exp \left( b \right)\). Both face the same price for bread \({{p}_{b}}\) and the same price for honey p _h . Jacob has total budget of \({{y}_{J}}\) and Esau has total budget of \({{y}_{E}}\) , both of which exceed \({{p}_{b}}\) . Are the following statements true or false? Briefly justify your answers.

1. Jacob and Esau will purchase the same quantity of honey as each other.
2. Jacob and Esau will purchase the same quantity of bread as each other only if \({{y}_{J}}={{y}_{E}}\)

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