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JAMB Economics 2013 Question 11

Question 11

Theory of Consumer Behaviour

One of the assumptions of the cardinalist approach is

  1. A.diminishing marginal rate of substitution.
  2. B.the consistency and transitivity of choice.
  3. C.that total utility depends on the quantity of the commodities consumed.
  4. D.unstable marginal utility of money.
Show the answer and explanation

Answer: C (that total utility depends on the quantity of the commodities consumed.)

Explanation

The cardinal approach measures utility in units and assumes total utility depends on the quantities consumed. A and B belong to the ordinal approach, and it assumes the marginal utility of money is constant.