Statement I: Marginal utility and consumer surplus are identical concepts.
Statement II: Utility is simply a measure of what the buyer is willing to pay for a good or service.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question

Quizplus · Accepted Answer

Statement I is false because marginal utility and consumer surplus are not identical concepts. Marginal utility refers to the additional satisfaction or utility gained from consuming one extra unit of a good or service, whereas consumer surplus refers to the difference between the price a consumer is willing to pay for a good or service and the actual price they pay.

Statement II is true because utility is indeed a measure of what the buyer is willing to pay for a good or service. The more utility or satisfaction a buyer can derive from a good or service, the more they are willing to pay for it. However, this statement alone does not account for the supply side of the market, which can influence the actual price of the good or service.

Statement I: Marginal Utility and Consumer Surplus Are Identical Concepts