JNU SSS 2012 Question 58: Budget constraint and consumer equilibrium
In a two-good world, there is an individual with income m=3 and utility function is given by u(x,y)=x0⋅5y0⋅5. The price of good x is 1 per unit and the price of good y is also 1 per unit.
If both goods x and y can be consumed only in integer amounts (i.e., zero unit, one unit, two units, etc.), 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 both goods x and y can be consumed only in integer amounts (i.e., zero unit, one unit, two units, etc.), then the optimum consumption bundle is (A) x = 3, y = 1 (B) x = 1, y = 3 (C) x = 3, y = 0 (D) either x = 2, y = 1 or x = 1, y = 2
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 both goods x and y can be consumed only in integer amounts (i.e., zero unit, one unit, two units, etc.), 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 Non-standard budgets: bundles, rationing and quantity limits, part of Budget constraint and consumer equilibrium in Microeconomics.
Budget sets with bundled offers, tie-ins, quantity caps, block prices or liquidity constraints.
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