Question : Statement 1: The concept of consumer equilibrium can occur at multiple points of tangency between the budget line and indifference curves.
Statement 2: The consumer can achieve the same level of utility by choosing different combinations of goods that are equally preferable.
Option 1: Statement 1 is true, and statement 2 is false.
Option 2: Statement 1 is false, and statement 2 is true.
Option 3: Both statement 1 and statement 2 are true.
Option 4: Both statement 1 and statement 2 are false.
Correct Answer: Statement 1 is false, and statement 2 is true.
Solution : The correct answer is (b) Option B: Statement 1 is false, and statement 2 is true.
Statement 1 is false. Consumer equilibrium occurs at a single point of tangency between the budget line and the highest attainable indifference curve. The consumer maximizes utility by choosing the consumption bundle where the budget line is tangent to the highest attainable indifference curve.
Statement 2 is true. Different combinations of goods that are equally preferable to the consumer can provide the same level of utility. This is because indifference curves represent different combinations of goods that give the consumer the same level of satisfaction.
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