Question

An assumption of the constant marginal utility of money means the importance of money to the consumer is _________.

• A. rising
• B. falling
• C. unchanged
• D. none of the above

Answer 1

Answer: (C)

unchanged

Constant marginal utility of money means that the utility per unit of money remains unchanged for the consumer. This implies that each additional unit of money provides the consumer with the same level of satisfaction. This leads to the use of money as the measuring rod in utility analysis.