Skip to content
We use only essential cookies to keep you signed in and remember your preferences. See our Cookie Policy.
TestStop
MocksPracticeResourcesIndiaBlogPricing
Sign in
Questions › IIT JAM › IIT JAM 2023 › Q52
2 marksMicroeconomics › Budget constraint and consumer equilibrium › Corner solutionsHardabout 3 min

IIT JAM 2023 Question 52: Budget constraint and consumer equilibrium

A consumer has u(x1,x2)=max⁡{0.5x1,0.5x2}+min⁡{x1,x2}u(x_1,x_2)=\max\{0.5x_1,0.5x_2\}+\min\{x_1,x_2\}u(x1​,x2​)=max{0.5x1​,0.5x2​}+min{x1​,x2​} with income yyy, p2=1p_2=1p2​=1. There is a lowest price pˉ1\bar p_1pˉ​1​ such that if p1>pˉ1p_1>\bar p_1p1​>pˉ​1​ the unique optimum is to buy ONLY good 2. Then pˉ1\bar p_1pˉ​1​ is ________ (in integer).

Answer and worked solution

Checking your account…

Plain-text version

A consumer has u(x₁,x₂)=max {0.5x₁,0.5x₂}+min {x₁,x₂} with income y, p₂=1. There is a lowest price p̄₁ such that if p₁>p̄₁ the unique optimum is to buy ONLY good 2. Then p̄₁ is (in integer).

Also written as: A consumer has u(x_1,x_2)=max {0.5x_1,0.5x_2}+min {x_1,x_2} with income y, p_2=1. There is a lowest price p_bar_1 such that if p_1>p_bar_1 the unique optimum is to buy ONLY good 2. Then p_bar_1 is (in integer).

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

What this question tests

This question is on Corner solutions, part of Budget constraint and consumer equilibrium in Microeconomics.

Optima at the edge of the budget set, where the consumer spends nothing on one good.

TestStop has 8 past-paper questions on this subtopic.

Take this paper as a timed mockMore on Corner solutions

Similar questions from other papers

  • CUET-PG 2026 · Q66Match the LIST-I with LIST-II. List I A. Marginal rate of Substitutions B. Budget Line C. Indifference Curve D. Price Ratio. List II I. Slope of Budget Line II. Ratio…
  • CUET-PG 2025 · Q37An individual's utility function for two goods - milk (M) and butter (B) is given as U(M,B) = 5M - 10B and the cost of each unit of the two goods is Rs 1 and the…
  • IIT JAM 2025 · Q50Suppose utility function of a consumer is u(x,y)=xy, where x and y are quantities of the two commodities consumed. If price of x is Re.1 and that of y is Rs.2, and…
  • UGC-NET 2025 · Q28Which of the following are true regarding the outcome of a consumer's optimization process? A. The marginal utility per rupee spent on each good is the same. B. The…
  • CUET-PG 2024 · Q19A utility maximizing consumer has a utility function given by U(X, Y) = 2X + Y. He has a budget constraint given by X + 2Y = 10. In equilibrium he purchases

Question from the IIT JAM 2023 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.