Economics and Utility Function

Topics: Economics, Utility, Marginal utility Pages: 1 (276 words) Published: August 28, 2013
UTILITY NUMERICALS

1. A consumer divides Rs.90 to be divided between two commodities X and Y, and suppose the unit price of Y is fixed at Re. 0.20. What will be his demand equation for X. If his utility function is U = log Qx + 2 log Qy.

2. A consumer has a monthly budget of Rs.4000. He spends all his income on two goods A & B. Price of A and B are Rs2 and Rs.4 respectively. His utility function is U = 3 log A+ 9log B. Find the optimum combination of A & B for the consumer.

3. Given: Monthly Budget = 1000, Px = Rs.10/Kg, Py = Rs.15/litre. U = (XY+X+Y). Find the optimum combination and the expenditure?

4. Given: Monthly Budget = Rs.100, Px = Rs.3, Py = Rs.4, U = X 1.5Y. Find the optimum allocation of expenditure?

5. For the consumer, Marginal Utilities of two goods consumed, A and B, are

MUA = 22 –x
MUB = 21 – 2y

Where, x is the amount spent on product A, and y is the amount spent on B. Assume that the consumer has only Rs.100 to spend on both products A and B, if the price of B is half the price of B is half the price of A?

6. A consumer has a monthly budget of Rs.200 for buying commodities A and B. Prices of A and B are Rs.2 and Rs.3 respectively. His utility function is U = 4QaQb. If the objective of the consumer is to maximize his utility, how the consumer should allocate his budget between good A and B.
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