One of these is not an assumption of the cardinalist theory of utility?

1. Analyze the question We need the option that is NOT an assumption of the cardinalist (cardinal) utility theory.

2. Explain the concept The cardinalist theory (Marshall and others) says utility can be measured in numbers (utils). Its main assumptions are:

• The consumer is rational and aims to maximise satisfaction.
• Utility is cardinally measurable, in units called utils.
• Diminishing marginal utility: each extra unit of a good gives less additional satisfaction.
• The marginal utility of money is constant. Money is the measuring rod of utility.
• Total utility is additive, and the consumer has limited income.

The ordinalist theory (Hicks and Allen, using indifference curves) has different assumptions. It says utility cannot be measured in numbers, only ranked. Its key assumptions are:

• Consistency of choice: if A is preferred to B, then B is not preferred to A.
• Transitivity of choice: if A is preferred to B and B to C, then A is preferred to C.
• Non-satiation and diminishing marginal rate of substitution.

3. Step-by-step solution

• A. Consumer is rational: this is a cardinalist assumption.
• B. Diminishing marginal utility: this is the core of the cardinalist theory (the Law of Diminishing Marginal Utility).
• C. Concept of money utility: money is the measure of utility, with constant marginal utility of money. This is a cardinalist assumption.
• D. Consistency and transitivity of choice: this belongs to the ordinalist (indifference curve) approach, not the cardinalist one.

4. Answer The option that is not a cardinalist assumption is D.

5. Exam tip Link the word to the idea:

• Cardinal = Counting (utils, money measure, diminishing MU).
• Ordinal = Order (ranking, consistency, transitivity, indifference curves).

When you see "consistency" or "transitivity", think ordinalist.