Which of the following are the assumptions related to the theory of consumer behaviour as per the…
The Marshallian cardinal utility approach assumes that (i) the consumer is rational, (iii) utility is cardinally measurable in 'utils', (v) commodities exhibit diminishing…
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Which of the following are the assumptions related to the theory of consumer behaviour 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.
(vii) For calculating total utility, individual utilities of commodities are to be multiplied.
Answer and explanation
Correct answer C
The Marshallian cardinal utility approach assumes that (i) the consumer is rational, (iii) utility is cardinally measurable in 'utils', (v) commodities exhibit diminishing marginal utility, and (vi) the consumer seeks to maximize total satisfaction. Conversely, money income is limited, the marginal utility of money is assumed constant (not diminishing), and total utility is additive rather than multiplicative.
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