The utility function of a consumer is U = f(q1, q2) = q1 * q2. Suppose the price of q1 is p1 = 1 and price of q2 is p2 = 2. The consumer wants to spend an amount of k units only. What will be his demand for q1 and q2?
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Budget constraint and consumer equilibrium has come up 99 times in 7 exams since 2004.
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.
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Question from the UGC-NET 2023 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.