Which one of the following assumptions is not necessary for the cardinal utility theory?

Rationality of the consumer

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Constant marginal utility of money

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Perfectly competitive market

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Additivity of utility

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Solution

The correct option is D Additivity of utility
Additivity of utility refers to the summation of each unit of utility in order to derive total utility. Cardinal utility theory measure utility in numbers and thus additivity of utility is not necessary for cardinal utility theory.

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