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.
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 false.
Solution : The correct answer is (d) Option D: Both statement 1 and statement 2 are false. Statement 1 is false. A consumer achieves equilibrium when they are maximizing their total utility, given their income and the prices of goods. This does not mean that they will consume equal quantities of all goods. In fact, it is more likely that they will consume different quantities of different goods, depending on their preferences and the prices of the goods.
For example, a consumer may have a strong preference for coffee, and may be willing to spend a large portion of their income on coffee, even if the price of coffee is high. In this case, the consumer will consume a large quantity of coffee, and a smaller quantity of other goods.
Statement 2 is also false. The concept of consumer equilibrium assumes that the consumer is rational, and that they are trying to maximize their total utility. However, it is possible that a consumer may not be rational, or that they may not be trying to maximize their total utility. For example, a consumer may be influenced by advertising, or they may make decisions based on emotions, rather than on rational calculations.
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.
Question : Statement 1: The concept of consumer equilibrium assumes that the consumer has perfect information about prices and product attributes.
Statement 2: The consumer's equilibrium is based on rational decision-making and the pursuit of maximum satisfaction.
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 : 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.
Question : Statement 1: The concept of consumer surplus represents the additional satisfaction gained by consuming a good.
Statement 2: Consumer surplus can be calculated by finding the difference between the total utility and the marginal utility of the last unit consumed.
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