Question : Assertion: Consumer equilibrium can be achieved at a point where the consumer's budget line is parallel to the horizontal axis.
Reason: This occurs when the consumer allocates their entire budget to one good, maximizing their utility within the given constraint.
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: The assertion is true, but the reason is false.
Solution : The correct option is (c) Option C The assertion is true, but the reason is false.
Consumer equilibrium can be achieved at a point where the consumer's budget line is parallel to the horizontal axis. This occurs when the consumer exhausts their entire budget on one good, thereby maximizing their utility within the given constraint. However, the reason provided is incorrect in stating that allocating the entire budget to one good maximizes utility.
Consumer equilibrium is not solely determined by allocating the entire budget to one good. It is achieved when the consumer maximizes their utility given their budget constraint. This can occur at any point where the budget line is tangent to an indifference curve, indicating that the consumer is allocating their budget in a way that optimizes their satisfaction.
Question : Assertion: Consumer equilibrium occurs when the consumer's budget line is tangent to the highest possible indifference curve.
Reason: At this point, the consumer is maximizing their utility within the given budget constraint.
Question : Assertion: Consumer equilibrium can be achieved at a point where the consumer's budget line is steeper than any indifference curve.
Reason: This occurs when the consumer exhausts their budget on the good with the highest marginal utility.
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
Question : Assertion: Consumer equilibrium can occur at multiple points of tangency between the budget line and indifference curves.
Reason: The consumer can achieve the same level of utility by choosing different combinations of goods that are equally preferable.
Question : Assertion: The concept of consumer surplus represents the difference between the price a consumer is willing to pay and the actual price they pay for a good.
Reason: Consumer surplus reflects the additional benefit or utility the consumer receives from purchasing a good.
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