Question
Which one of the following is not an assumption of
Marshall’s Cardinal Utility Analysis ?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.
If 64% of (P - Q) is equal to 20% of 80% of (P + Q), then find the value of Q:P.
 An officer ordered 3 computers of brand X and some computers of brand Y. The price of one computer of brand X was thrice that of brand Y. When the ord...
- The cost of tea increased by 25%, so Meena reduced her consumption by 20%. Calculate the percentage change in her expenditure on tea.
Rihan spends 40% of his salary, which is Rs. 1200 more than the amount he would spend if he spent 30% of his salary. What is the total salary of Rihan?
P spends 26% of his salary on transportation, 24% on food, 22% on children’s education and 19% on medical. He deposits the remaining amount of Rs....
The only expenses of Arun are on grocery, rent and fun expenses. Arun spent Rs. 3,000 on fun, amount spent by him on rent is Rs. 9,000 more than that on...
In a school with 2,400 students, 45% of the students prefer indoor games, while the remaining students prefer outdoor games. Among those who prefer indo...
In an assembly election, a candidate got 60% of the total valid votes. 2% of the total votes were declared invalid. If the total number of voters is 126...
Two numbers are less than a third number by 40% and 46% respectively. Find the percent by which the second number is less than the first.
A person sells each package of snacks for Rs. 10 each. On Monday, he sold 100 packages which was 25 more than that on Tuesday but 10 less than that on W...
