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    Question

    Which of the following is an assumption of Ordinary

    Utility Theory?
    A Cardinal measurability of utility Correct Answer Incorrect Answer
    B Diminishing marginal utility of money Correct Answer Incorrect Answer
    C Rational behaviour of the consumer Correct Answer Incorrect Answer
    D Interpersonal comparability of utility Correct Answer Incorrect Answer

    Solution

    A key assumption of Ordinary Utility Theory is the rational behaviour of the consumer. This implies that consumers make choices to maximize their utility, given their preferences and budget constraints, and their preferences are complete and transitive.

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