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Questions › JNU › JNU SSS 2016 › Q34
1 markMicroeconomics › Demand theory and elasticity › Income elasticity, normal and inferior goods and Engel curvesHardabout 2 min

JNU SSS 2016 Question 34: Demand theory and elasticity

Let the following utility function represent the preference relation of an individual : U(x, y)=x1/2+yU(x,\ y) = x^{1/2} + yU(x, y)=x1/2+y Let PxP_xPx​, PyP_yPy​, MMM denote the prices of goods xxx, yyy and money income respectively; PxP_xPx​, PyP_yPy​, M>0M > 0M>0.

Given prices, as MMM increases optimal consumption of xxx

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Let the following utility function represent the preference relation of an individual: U(x, y) = x^(1/2) + y Let Pₓ, P_y, M denote the prices of goods x, y and money income respectively; Pₓ, P_y, M > 0. Given prices, as M increases optimal consumption of x (A) increases (B) decreases (C) remains constant (D) Cannot say

Also written as: Let the following utility function represent the preference relation of an individual: U(x, y) = x^(1/2) + y Let P_x, P_y, M denote the prices of goods x, y and money income respectively; P_x, P_y, M > 0. Given prices, as M increases optimal consumption of x

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.

  • IIT JAM 2021 · Q49A consumer's utility is u(x₁, x₂) = x₁ + 2√(x₂). At current prices and income the optimal bundle is (x₁ =…
  • IIT JAM 2022 · Q21An analyst estimated the demand function Q_E = 0.75 - 1.5P_E + 2.5P_F - 0.5P_B + 3.2I, where Q_E is electric…
Practise Demand theory and elasticityMore on Income elasticity, normal and inferior goods and Engel curves

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