List of top Microeconomics Questions on Utility Function asked in GATE XH-C1

Consider a two good economy where a denotes consumption of apricots and b denotes consumption of bananas. Anu's utility function is U^Anu (a, b) = a + 2b, and Binu's utility function is U^Binu (a, b) = min{a, 2b}. Anu initially has no apricots and 12 bananas. Binu initially has 12 apricots and no bananas. In the competitive equilibrium, which one of the following will be Anu's optimal consumption bundle ?

Suppose Vijay has purchased a high-speed car worth ₹1000000. During the purchase, an Insurance company has shared the latest available road safety survey, wherein it is mentioned that, due to heavy congestion on roads, there is a 40% chance of an accident within the first year of car purchase resulting in loss of the car value by 60%. Vijay’s utility function for wealth (W) is given by \( U(W) = \ln(W) \). If Vijay plans to buy an accident insurance having a premium of 30%, then he will purchase an insurance of ₹_________ (round off to the nearest integer).