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Questions › JNU › JNU SSS 2016 › Q36
1 markMicroeconomics › Budget constraint and consumer equilibrium › Demand under complements, substitutes and quasilinear utilityHardabout 2 min

JNU SSS 2016 Question 36: Budget constraint and consumer equilibrium

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.

If Px=PyP_x = P_yPx​=Py​, in the optimal consumption bundle

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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. If Pₓ = P_y, in the optimal consumption bundle (A) equal amount of x, y is consumed (B) consumption of x is more than y (C) consumption of y is more than x (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. If P_x = P_y, in the optimal consumption bundle

Budget constraint and consumer equilibrium has come up 99 times in 7 exams since 2004.

What this question tests

This question is on Demand under complements, substitutes and quasilinear utility, part of Budget constraint and consumer equilibrium in Microeconomics.

Deriving demand when preferences are L-shaped, linear or quasilinear, and what that implies for income and price responses.

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