Question : Statement 1: The consumer achieves equilibrium when the marginal utility per dollar spent is equal for all goods.
Statement 2: At equilibrium, the consumer maximizes their total utility within the constraints of their budget.
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: Both statement 1 and statement 2 are true.
Solution : The correct answer is (c) Option C: Both statement 1 and statement 2 are true.
Statement 1 is true. The consumer achieves equilibrium when the marginal utility per dollar spent is equal for all goods. This means that the consumer allocates their budget in such a way that the last dollar spent on each good yields the same additional utility.
Statement 2 is also true. At equilibrium, the consumer maximizes their total utility within the constraints of their budget. This means that the consumer has allocated their budget in a way that maximizes their overall satisfaction or utility, given the prices of goods and their income.
Question : Statement 1: A consumer achieves equilibrium by consuming equal quantities of all goods.
Statement 2: The concept of consumer equilibrium assumes that the consumer's goal is to maximize their total utility.
Question : Statement 1: The slope of the budget line represents the relative price of two goods.
Statement 2: The consumer achieves equilibrium when the marginal rate of substitution is equal to the relative price of the goods.
Question : In the cardinal utility approach, consumer's equilibrium is achieved when:
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
Question : In the cardinal utility approach, the consumer's equilibrium is achieved when:
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