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Questions › JNU › JNU SIS 2011 › Q5
4 marks, −1Microeconomics › Budget constraint and consumer equilibrium › Utility maximisation and the interior optimumEasyabout 2 min

JNU SIS 2011 Question 5: Budget constraint and consumer equilibrium

Let the utility function be U=xy2U = xy^2U=xy2, where xxx and yyy are two consumption goods. The prices of the two goods and money income are px=2p_x = 2px​=2, py=3p_y = 3py​=3, M=9M = 9M=9. The optimal quantities consumed of the two goods are

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Let the utility function be U = xy², where x and y are two consumption goods. The prices of the two goods and money income are pₓ = 2, p_y = 3, M = 9. The optimal quantities consumed of the two goods are (A) x = 2, y = 3/2 (B) x = 2, y = 4 (C) x = 3/2, y = 2 (D) x = 3/2, y = 3/2

Also written as: Let the utility function be U = xy^2, where x and y are two consumption goods. The prices of the two goods and money income are p_x = 2, p_y = 3, M = 9. The optimal quantities consumed of the two goods are

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.

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Question from the JNU SIS 2011 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.