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Questions › CUET-PG › CUET-PG 2023 Shift 1 › Q34
4 marks, −1Microeconomics › Budget constraint and consumer equilibrium › Utility maximisation and the interior optimumModerateabout 1 min

CUET-PG 2023 Shift 1 Question 34: Budget constraint and consumer equilibrium

For the utility function u(x,y)=xyu(x, y) = xyu(x,y)=xy and given budget constraint M=pxx+pyyM = p_x x + p_y yM=px​x+py​y, what is the optimum bundle of consumption of x and y?

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For the utility function u(x, y) = xy and given budget constraint M = pₓ x + p_y y, what is the optimum bundle of consumption of x and y? (A) (M/Pₓ, M/P_y) (B) (M/2Pₓ, M/2P_y) (C) (M/P_y, M/Pₓ) (D) (M/2P_y, M/2Pₓ)

Also written as: For the utility function u(x, y) = xy and given budget constraint M = p_x x + p_y y, what is the optimum bundle of consumption of x and y?

Budget constraint and consumer equilibrium has come up 99 times in 7 exams since 2004.

What this question tests

This question is on Utility maximisation and the interior optimum, part of Budget constraint and consumer equilibrium in Microeconomics.

Choosing the best affordable bundle where an indifference curve is tangent to the budget line, including Cobb-Douglas demand.

TestStop has 20 past-paper questions on this subtopic.

Take this paper as a timed mockMore on Utility maximisation and the interior optimum

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Question from the CUET-PG 2023 Shift 1 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.