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Questions › UoH › UoH 2020 › Q73
1 mark, −0.33Microeconomics › Budget constraint and consumer equilibrium › Utility maximisation and the interior optimumModerateabout 2 min

UoH 2020 Question 73: Budget constraint and consumer equilibrium

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 using the Lagrangian function method. Then at the equilibrium point, the marginal utility of money λ\lambdaλ will be equal to ________.

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The total utility function U(x₁, x₂) = x₁ x₂ is maximized subject to the budget constraint x₁ + x₂ = 6 using the Lagrangian function method. Then at the equilibrium point, the marginal utility of money λ will be equal to. (A) 3 (B) 6 (C) 9 (D) 1.5

Also written as: 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 using the Lagrangian function method. Then at the equilibrium point, the marginal utility of money lambda will be equal to.

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.

TestStop has 20 past-paper questions on this subtopic.

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

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Question from the UoH 2020 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.