Re: DSE 2005

Posted by duck on May 07, 2013; 12:17pm
URL: http://discussion-forum.276.s1.nabble.com/DSE-2005-tp7580451p7580458.html

We know, if there is no surcharge she will consume 5 units of Electricity.
Now, if Surcharge is imposed but on every unit excess of 4 units..then we can infer that she will definitely consume E=4. so, W=4 (as utility is min). Therefore, she is left with income of 2rs after surcharge.
So, we can write the budget constraint as: 2E+W=2
=> E=W= 2/3.
=> Total consumption of E = 4+2/3 =14/3