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The question is as follows: A consumer has a budget of 3000 units. He uses it to buy 2 goods: bread and cheese. Cheese costs 30 units/kg, and bread costs 3units/kg. The indifference curve is represented by the formula of: Quantity of cheese = alpha/Quantity of bread. Calculate the optimal combination of these two goods.

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  • $\begingroup$ Hi, Welcome to Economics SE! we have a policy regarding homework questions where users must demonstrate effort using text, markdown syntax and/or images space provided in the text of his question submission for the site. Using only images as proof of work is insufficient. for more details see:economics.meta.stackexchange.com/questions/1465/… $\endgroup$
    – 1muflon1
    Commented Oct 24, 2020 at 13:39
  • $\begingroup$ @1muflon1 Thank you. It's not a homework question. The question is given for context. I cannot represent my work without knowing what does alpha mean. $\endgroup$
    – Alumi
    Commented Oct 24, 2020 at 14:57
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    $\begingroup$ It does not matter it is not for actual homework, it is homework-esque question. Whether it is for self study or work it does not matter you should show at least little bit of effort here you just post the question without any attempt at solving it $\endgroup$
    – 1muflon1
    Commented Oct 25, 2020 at 10:10

1 Answer 1

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The given indifference curve formula can be written $Q_C=\frac{\alpha}{Q_B}$ where $Q_C$ is quantity of cheese and $Q_B$ is quantity of bread. Rearranging as $Q_CQ_B=\alpha$, this suggests that the indifference curve is derived from the utility function:

$$U(Q_C,Q_B)= Q_CQ_B$$

Alpha appears to be just a particular value of $U$ defining the particular indifference curve, that is, $U=\alpha$ implies $Q_CQ_B=\alpha$.

You might also encounter the letter alpha in the context of a Cobb-Douglas utility function such as $U(X,Y)=X^{\alpha}Y^{\beta}$, but that appears not to be relevant here.

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