Which one of the following assumptions is not related to consumer behaviour based on the cardinal utility approach?
Diminishing marginal utility of money
This question tests the assumptions underlying the cardinal utility approach of consumer behaviour associated with Marshall, so we must recall exactly what that approach takes for granted.
The cardinal approach assumes: (i) rationality - the consumer aims to maximise satisfaction; (ii) cardinal measurability - utility can be measured in absolute numbers (utils) and even in money terms; (iii) diminishing marginal utility - as more of a good is consumed, the extra satisfaction from each successive unit falls; (iv) constant marginal utility of money - money is the measuring rod, so its own marginal utility must stay fixed; and (v) maximisation of satisfaction subject to a limited money income.
Because money is used as the yardstick to measure the utility of goods, its marginal utility has to be treated as constant. If the marginal utility of money itself fell as the consumer spent more, the measuring rod would keep shrinking and could not give a stable measure of utility. Hence 'diminishing marginal utility of money' directly contradicts the approach and is not one of its assumptions.
Checking the other options: rationality, cardinal measurability, and maximisation of satisfaction within a limited income are all genuine and standard assumptions of the cardinal school.
Therefore the assumption that is not related to the cardinal utility approach is the diminishing marginal utility of money.
Similar Questions
A consumer consults the company websites to gather information about various models of a car. Which type of source of information is he using?
From the following set of information, which combination is correct to define the process of perception in order to understand consumer behaviour?
(a) Selective Attention
(b) Selective Distortion
(c) Selective Retention
(d) Selective Apprehension
In the model of consumer adoption of new products developed by Everett M. Rogers, the first category of people to adopt a new product is called:
The fundamental determinant of a person's wants and behaviour is:
Note: This question was dropped by UGC and marks were awarded to all candidates; the answer below is the best-reasoned one.
Personal influence is most important at the _____ stage of the consumer adoption process.
Match the two sets of concepts:
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List – I List – II a. CCI i. Consumer buying decision process b. Cognitive dissonance ii. ‘Marketing Myopia’ c. Everett M. Rogers iii. Diffusion of Innovation d. Theodore Levitt iv. Predatory pricing Codes :
Important Questions from Consumer Buying Behaviour
Match List I with List II
LIST I
(Buyer's Need Assessment Question)
LIST II
(Example)
A. Problem Impact Question I. How much inventory of the product do you carry? B. Problem discovery question II. Have you experienced any delays in getting those materials from your current suppliers? C. Solution value question III. What effects do the delays in receiving the materials have on your production costs? D. Situational question IV. If the rejection rate on your quality inspection is reduced to under 1%, how much would that save you? Choose the correct answer from the options given below:
For the following two statements of Assertion (A) and Reasoning (R) indicate the correct code :
Assertion (A) : The self image could be an individual's own perceived image and actual image based on how others perceive the individual.
Reasoning (R) : Large number of products like credit cards, automobiles, readymade garments, designer ware, cosmetics and perfumes are bought due to self image and demographic variables like income may not be important in purchase decisions for these products.
Codes :
- A descriptive thought that a person holds about something is called
- Statement - I : We are motivated to re-evaluate our beliefs, attitudes, opinions or values occurred at two different time.
Statement - II : The difference due to some intervention occurred at either point of time motivates us to search a newer option and thus satisfies our mind/ anxiety.
Code : - Which of the statements are correct ? Select correct code.
Statement (I) : Opinions can be described as the slow responses we might give to opinion poll questions about any issue.
Statement (II) : Attitudes are held with a greater degree of conviction, over longer duration and more likely to influence behaviour.
Statement (III) : Values are held more strongly than attitudes and underpin our attitudinal behaviour.
Code :
