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Questions › UoH › UoH 2013 › Q96
1 mark, −0.33Microeconomics › Budget constraint and consumer equilibrium › Utility maximisation and the interior optimumEasyabout 1 min

UoH 2013 Question 96: Budget constraint and consumer equilibrium

If the total utility function U(x1,x2)=x1x2U(x_1, x_2) = x_1 x_2U(x1​,x2​)=x1​x2​ is maximized subject to the budget constraint x1+x2=6x_1 + x_2 = 6x1​+x2​=6, the total utility will be maximum when x1=?x_1 = ?x1​=? and x2=?x_2 = ?x2​=? units are consumed (Hint: Apply mathematical method of maximization)

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If the total utility function U(x₁, x₂) = x₁ x₂ is maximized subject to the budget constraint x₁ + x₂ = 6, the total utility will be maximum when x₁ =? and x₂ =? units are consumed (Hint: Apply mathematical method of maximization) (A) x₁ = x₂ = 3 units (B) x₁ = 3 and x₂ = 9 units (C) x₁ = 6 and x₂ = 9 units (D) x₁ = x₂ = 9 units

Also written as: If the total utility function U(x_1, x_2) = x_1 x_2 is maximized subject to the budget constraint x_1 + x_2 = 6, the total utility will be maximum when x_1 =? and x_2 =? units are consumed (Hint: Apply mathematical method of maximization)

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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Practise Budget constraint and consumer equilibriumMore on Utility maximisation and the interior optimum

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