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Questions › IIT JAM › IIT JAM 2025 › Q21
2 marks, −0.667Microeconomics › Demand theory and elasticity › Income elasticity, normal and inferior goods and Engel curvesHardabout 2 min

IIT JAM 2025 Question 21: Demand theory and elasticity

Consider a consumer with the utility function U(x,y)=y+xU(x,y)=y+\sqrt{x}U(x,y)=y+x​ where xxx and yyy are quantity of two commodities consumed. Which one of the following is TRUE?

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Plain-text version

Consider a consumer with the utility function U(x,y)=y+√x where x and y are quantity of two commodities consumed. Which one of the following is TRUE? (A) Income elasticity of demand for both goods is 1. (B) Income elasticity of demand for good x is 0. (C) Income elasticity of demand for good y is 0. (D) Income elasticity of demand for good x is 0.5 and good y is 1.

Also written as: Consider a consumer with the utility function U(x,y)=y+sqrt(x) where x and y are quantity of two commodities consumed. Which one of the following is TRUE?

Demand theory and elasticity has come up 161 times in 7 exams since 2004.

What this question tests

This question is on Income elasticity, normal and inferior goods and Engel curves, part of Demand theory and elasticity in Microeconomics.

How demand responds to income, how goods are classified by that response, and Engel's law.

TestStop has 33 past-paper questions on this subtopic; the nearest in year are below.

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Question from the IIT JAM 2025 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.