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Questions › DSE › DSE 2007 › Q1
1 markMicroeconomics › Budget constraint and consumer equilibrium › Demand under complements, substitutes and quasilinear utilityModerateabout 2 min

DSE 2007 Question 1: Budget constraint and consumer equilibrium

Consider a consumer having a utility function U=2x+yU=2x+yU=2x+y where xxx and yyy are two commodities. Suppose the price of xxx and yyy are both Rs. 5 each and the consumer's income is Rs. 100. In equilibrium, the consumer will consume the bundle

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Consider a consumer having a utility function U=2x+y where x and y are two commodities. Suppose the price of x and y are both Rs. 5 each and the consumer's income is Rs. 100. In equilibrium, the consumer will consume the bundle (A) (10,10) (B) (0,20) (C) (20,0) (D) none of the above

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

What this question tests

This question is on Demand under complements, substitutes and quasilinear utility, part of Budget constraint and consumer equilibrium in Microeconomics.

Deriving demand when preferences are L-shaped, linear or quasilinear, and what that implies for income and price responses.

TestStop has 23 past-paper questions on this subtopic; the nearest in year are below.

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Question from the DSE 2007 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.