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Questions › JNU › JNU SIS 2013 › Q2
4 marks, −1Microeconomics › Budget constraint and consumer equilibrium › Utility maximisation and the interior optimumModerateabout 2 min

JNU SIS 2013 Question 2: Budget constraint and consumer equilibrium

Manik's utility function on goods xxx and yyy is U(x; y)=x+yU(x;\ y) = \sqrt{x} + \sqrt{y}U(x; y)=x​+y​. Prices of xxx and yyy are given as px=5p_x = 5px​=5 and py=1p_y = 1py​=1. Assume that Manik's income is equal to 60. What is his optimal consumption of the two goods?

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Manik's utility function on goods x and y is U(x; y) = √x + √y. Prices of x and y are given as pₓ = 5 and p_y = 1. Assume that Manik's income is equal to 60. What is his optimal consumption of the two goods? (A) x = 5, y = 35 (B) x = 4, y = 40 (C) x = 0, y = 60 (D) x = 2, y = 50

Also written as: Manik's utility function on goods x and y is U(x; y) = sqrt(x) + sqrt(y). Prices of x and y are given as p_x = 5 and p_y = 1. Assume that Manik's income is equal to 60. What is his optimal consumption of the two goods?

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 JNU SIS 2013 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.