Which one of the following is not an assumption of

Solution

Alfred Marshall’s 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.

• “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 Marshall’s cardinal utility approach.
• Marshall’s framework predates the indifference curve concept and does not require the convexity assumption.