Micro

Consumer Behaviour

Medium

In the cardinal utility analysis, the marginal utility of money is considered to be

Constant.

Decreasing.

Increasing.

First decreasing and then increasing.

✅ Correct Option: 1

Option 1: Constant -> In cardinal utility analysis, this is the fundamental assumption that marginal utility of money remains constant.

Option 2: Decreasing -> This is not assumed in cardinal utility analysis; it applies to individual commodities, not money.

Option 3: Increasing -> This contradicts the basic assumption of cardinal utility theory.

Option 4: First decreasing and then increasing -> This pattern is not considered in cardinal utility analysis.

Hence, Option 1: Constant -> In cardinal utility analysis (Marshallian approach), one of the key assumptions is that the marginal utility of money remains constant. This assumption is made to use money as a measuring rod of utility, allowing utility to be measured in cardinal terms (absolute numbers). While the law of diminishing marginal utility applies to individual commodities, money itself is assumed to have constant marginal utility to simplify the analysis and make utility measurable in monetary units. -> correct

2025: 15 May Shift 1

The total satisfaction derived from consuming the given amount of commodity X is known as _______

2025: 31 May Shift 1

How will an increase in the consumer's income affect the budget line?

Parallel inward shift of budget line.
Parallel outwards shift in budget line.
The budget line rotates outwards.
Budget line rotates and shifts outwards.

2026: 6 June Shift 1

Match List-I with List-II

List-I	List-II
(A) Demand function	(I) Change in total utility due to consumption of one additional unit of a commodity.
(B) Indifference curves	(II) The relation between the consumer's optimal choice of the quantity of a good and its price.
(C) Marginal utility	(III) The level of utility that can be expressed in numbers.
(D) Cardinal utility	(IV) Never intersect each other.

Choose the correct answer from the options given below:

2025: 21 May Shift 1

Good X and Y are considered to be substitutes by a consumer. He is currently consuming good X. If the price of Good Y decreases, then arrange the following in correct sequence.

(A) Demand for Good X decreases.

(B) Consumer finds Good Y to be relatively cheaper than Good X.

(D) Consumer shifts from Good X to Good Y.

Choose the correct answer from the options given below:

2025: 3 June Shift 1

How much units of Good Y can the consumer consume if she spends her entire income on that good?

2023: 20 June Shift 1

The demand for a good moves in opposite direction if change in the price of its __________ :

In the cardinal utility analysis, the marginal utility of money is considered to be

Solution

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