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.
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 true, and statement 2 is false.
Solution : The correct answer is (a) Option A: Statement 1 is true, and statement 2 is false. Statement 1 is true. Consumer surplus represents the additional satisfaction gained by consuming a good. It is the difference between the price a consumer is willing to pay for a good and the price they actually pay.
Statement 2 is false. Consumer surplus is not calculated by finding the difference between the total utility and the marginal utility of the last unit consumed. It is based on the difference between the willingness to pay (which is determined by the consumer's demand curve) and the actual price paid.
Question : Statement 1: Marginal utility is the additional satisfaction derived from consuming one additional unit of a good.
Statement 2: The law of diminishing marginal utility states that as a consumer consumes more of a good, the additional satisfaction derived from each additional unit decreases.
Question : Statement 1: Consumer surplus represents the difference between the price a consumer is willing to pay for a good and the price they actually pay.
Statement 2: Consumer surplus reflects the additional satisfaction gained by the consumer from purchasing the good.
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 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 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.
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