Which one is not an assumption of the theory of demand based on analysis of indifference curves?
A
Given scale of preferences as between different combinations of two goods.
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B
Diminishing marginal rate of substitution.
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C
Constant marginal utility of money
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D
Consumer would always prefer more of a particular good to less of the other good, other things remaining the same.
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Solution
The correct option is C Constant marginal utility of money The marginal utility of money changes depending on the inflation. Higher the inflation lower would be the utility of money as inflation reduces the value of the money and vice versa.