CAIE A-Level Economics 7.1.5 Limits of Marginal Utility Theory

Practise evaluating whether diminishing marginal utility and rational, measurable choice can explain individual and market demand across different goods and services.

Exam points

assess whether consumers possess information and consistency needed for rational utility maximisation
evaluate whether cardinal utility and individual demand can be aggregated into a market curve

[Maximum number: 1]

Utility theory is based on the assumption of the 'rational consumer'.
What is necessary to act as a 'rational consumer'?

access to
complete
information

addictive
behaviour

choice is
independent
of other
consumers

yes

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7.1.5—Limits of marginal utility theory question 1