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
Correct Answer: Marginal utility is equal to price
Solution : The correct answer is (b) Marginal utility is positive.
The consumer's equilibrium is attained at the point where the marginal utility of the last unit of a good consumed is positive. This means that the consumer is deriving additional satisfaction or utility from consuming that unit of the good. At this point, the consumer has allocated their resources in a way that maximizes their overall satisfaction, given their budget constraint and the prices of the goods. It is important to note that marginal utility is not necessarily equal to price or income in consumer equilibrium.
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 gets maximum satisfaction at the point where:
Option 1: Marginal utility = Price
Option 2: Marginal utility > Price
Option 3: Marginal utility < Price
Option 4: Marginal cost = Price
Question : In the cardinal utility approach, the consumer's equilibrium is achieved when:
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