Given U = (x + 2)(y + 1), P_x = 4, P_y = 6 and budget B = 130, find the optimum levels of purchase of x* and y*.
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UGC-NET 2025 Question 47: Budget constraint and consumer equilibrium
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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.
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