Question : Assertion: The concept of marginal utility becomes irrelevant when the consumer faces perfect competition.
Reason: In perfect competition, the consumer is a price taker and must accept the market price without considering individual preferences.
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 false, but the reason is true.
Solution : The correct answer is (d) Option D The assertion is false, and the reason is true.
The concept of marginal utility does not become irrelevant when the consumer faces perfect competition. Marginal utility is still a relevant concept in understanding consumer preferences and decision-making, regardless of the market structure. It represents the additional satisfaction obtained from consuming an additional unit of a good and plays a role in informing consumer choices.
In perfect competition, the consumer is indeed a price taker and must accept the market price without exerting individual influence over it. However, this does not render the concept of marginal utility irrelevant. Even though consumers must accept the market price, their preferences and the utility derived from consuming goods still play a role in determining the quantity of goods demanded.
Question : Statement 1: The concept of marginal utility becomes irrelevant when the consumer faces perfect competition.
Statement 2: In perfect competition, the consumer is a price taker and must accept the market price without considering individual preferences.
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.
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.
Question : Assertion: The concept of marginal utility is only applicable in the case of discrete goods.
Reason: Marginal utility measures the additional satisfaction obtained from consuming an additional unit of a good.
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: The slope of the budget line represents the relative price of two goods in the consumer's consumption bundle.
Reason: The consumer chooses a consumption bundle where the marginal rate of substitution equals the relative price of the goods.
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