Question : Assertion: A consumer maximizes utility by consuming goods until the marginal utility per unit of money spent is equal across all goods.
Reason: The consumer aims to allocate their budget in a way that maximizes their overall satisfaction.
Option 1: Both the assertion and reason are true, and the reason is a correct explanation of the assertion
Option 2: Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
Option 3: The assertion is true, but the reason is false.
Option 4: The assertion is false, but the reason is true.
Correct Answer: Both the assertion and reason are true, and the reason is a correct explanation of the assertion
Solution : The correct answer is (a) Option A Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
The assertion states that a consumer maximizes utility by consuming goods until the marginal utility per unit of money spent is equal across all goods. This means that the consumer allocates their budget in such a way that the additional satisfaction obtained from the last unit of money spent on each good is equal.
The reason provided states that the consumer aims to allocate their budget in a way that maximizes their overall satisfaction. This aligns with the assertion because in order to maximize satisfaction or utility, the consumer needs to balance their consumption across goods until the marginal utility per unit of money spent is equal.
Therefore, both the assertion and reason are true, and the reason provides a correct explanation of the assertion.
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