Question : The concept of consumer equilibrium refers to a situation where:
Option 1: The consumer is maximizing total utility.
Option 2: The consumer is maximizing marginal utility.
Option 3: The consumer is consuming goods in equal proportions.
Option 4: The consumer is consuming goods within the budget constraint.
Correct Answer: The consumer is maximizing marginal utility.
Solution : The correct answer is (b) The consumer is maximizing marginal utility.
Consumer equilibrium refers to a situation where a consumer maximizes their utility or satisfaction. In this context, it means that the consumer allocates their budget in such a way that the marginal utility per dollar spent on each good is equal. This is because, at the point of equilibrium, the consumer cannot increase their overall satisfaction by reallocating their spending.
While the consumer may also be consuming goods within the budget constraint, the concept of consumer equilibrium specifically focuses on the maximization of marginal utility.
Question : In the cardinal utility approach, consumer's equilibrium is achieved when:
Option 1: Total utility is maximized.
Option 2: Marginal utility is maximized.
Option 3: Marginal utility equals zero.
Option 4: Marginal utility per dollar spent is equal across all goods.
Question : The consumer's equilibrium is attained at the point where:
Option 1: Marginal utility is zero
Option 2: Marginal utility is positive
Option 3: Marginal utility is equal to price
Option 4: Marginal utility is equal to income
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