Question from MSQE 2011

Posted by Rajat on Jan 18, 2015; 9:04am
URL: http://discussion-forum.276.s1.nabble.com/Question-from-MSQE-2011-tp7595743.html

Consider two consumer with identical income M and utility function U=xy where x is the amount of restaurant good consumed and y is the amount of any other good consumed. The unit prices of the goods are give. The consumers have two alternative plans to pay the bill. A: Each pays for what she consumes. B: both pay one-half of the bill amount.

1) Find equilibrium consumption under plan A.
2) Find same for plan B.
3) Explain the difference if any.

Please help. Not clear about the approach. Thanks !