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Questions › JNU › JNU SSS 2012 › Q56
1 mark, −0.25Microeconomics › Budget constraint and consumer equilibrium › Utility maximisation and the interior optimumEasyabout 1 min

JNU SSS 2012 Question 56: Budget constraint and consumer equilibrium

In a two-good world, there is an individual with income m=3m = 3m=3 and utility function is given by u(x, y)=x0⋅5y0⋅5u(x,\ y) = x^{0\cdot 5} y^{0\cdot 5}u(x, y)=x0⋅5y0⋅5. The price of good xxx is 1 per unit and the price of good yyy is also 1 per unit.

If the individual can consume any non-negative amount of goods xxx and yyy, then the optimum consumption bundle is

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In a two-good world, there is an individual with income m = 3 and utility function is given by u(x, y) = x^(0· 5) y^(0· 5). The price of good x is 1 per unit and the price of good y is also 1 per unit. If the individual can consume any non-negative amount of goods x and y, then the optimum consumption bundle is (A) x = 1, y = 1 (B) x = 1·5, y = 1·5 (C) x = 2·5, y = 0·5 (D) x = 0, y = 3

Also written as: In a two-good world, there is an individual with income m = 3 and utility function is given by u(x, y) = x^(0* 5) y^(0* 5). The price of good x is 1 per unit and the price of good y is also 1 per unit. If the individual can consume any non-negative amount of goods x and y, then the optimum consumption bundle is

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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