Which of the following are the assumptions related to the theory of consumer behavior as per the…
The cardinal utility approach assumes a rational consumer, measurable utility, diminishing marginal utility of commodities and maximization of satisfaction. The consumer…
Choose your answer
Which of the following are the assumptions related to the theory of consumer behavior as per the Cardinal Utility Approach?
i. Consumer is rational
ii. No limit on money income
iii. Utility cardinally measurable
iv. Diminishing marginal utility of money
v. Diminishing marginal utility of commodities
vi. Maximization of satisfaction.
Answer and explanation
Correct answer C
The cardinal utility approach assumes a rational consumer, measurable utility, diminishing marginal utility of commodities and maximization of satisfaction. The consumer faces a limited income, and the conventional analysis treats the marginal utility of money as constant. Thus i, iii, v and vi form the correct set.
Practice for these exams
-
Telangana SET (TG SET)