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Questions › DSE › DSE 2009 › Q42
2 marksMicroeconomics › Budget constraint and consumer equilibrium › Utility maximisation and the interior optimumHardabout 4 min

DSE 2009 Question 42: Budget constraint and consumer equilibrium

Romeo and Juliet have 96 chocolates to divide. Romeo's utility is U=R8J4U=R^{8}J^{4}U=R8J4 and Juliet's is U=R4J8U=R^{4}J^{8}U=R4J8, where RRR is Romeo's consumption and JJJ is Juliet's, with R+J=96R+J=96R+J=96. Which of the following is true?

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Romeo and Juliet have 96 chocolates to divide. Romeo's utility is U=R⁸J⁴ and Juliet's is U=R⁴J⁸, where R is Romeo's consumption and J is Juliet's, with R+J=96. Which of the following is true? (A) Romeo would want to give Juliet some chocolates if he had more than 62. (B) Juliet would want to give Romeo some chocolates if she had more than 60. (C) Romeo and Juliet would never disagree about how to divide the chocolates. (D) Juliet would want to give Romeo some chocolates if she had more than 64 chocolates.

Also written as: Romeo and Juliet have 96 chocolates to divide. Romeo's utility is U=R^8J^4 and Juliet's is U=R^4J^8, where R is Romeo's consumption and J is Juliet's, with R+J=96. Which of the following is true?

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.

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Question from the DSE 2009 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.