Answer-Which one of the following is not an assumption of Marshall’s Cardinal Utility Analysis?

Question

Accepted Answer

Alfred Marshalls Cardinal Utility Theory also known as the Marshallian theory of consumer demand explains how a rational consumer allocates income among goods to maximize total utility. The key assumptions of this theory are  Rationality The consumer is rational and aims to maximize total satisfaction utility given income and prices. This supports Option A. Cardinal Measurability of Utility Utility can be measured in absolute cardinal numbers, such as utils, allowing direct comparison of satisfaction from different goods. This supports Option C. Diminishing Marginal Utility As more units of a good are consumed, the extra satisfaction from each additional unit declines. Constant Marginal Utility of Money The marginal utility of money is assumed constant, so money serves as a stable measure of utility. This supports Option B. Introspective Method  Independent Utilities The utility of one good is independent of others.  Why Option D is Incorrect in the context of Marshalls theory  Indifference curves are convex to the origin is an assumption of the Indifference Curve Ordinal Utility analysis developed later by Hicks and Allen, not part of Marshalls cardinal utility approach. Marshalls framework predates the indifference curve concept and does not require the convexity assumption.

Which one of the following is not an assumption of Marshall’s Cardinal Utility Analysis ?

Detailed Solution

More Research Questions

Hey! Ask a query

Please Register/Login

RBI Grade B 2026 Phase 1 Memory Based Paper