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The assumption that the total utility from a collection of goods equals the simple sum of their separate utilities is known as the assumption of:
Aconstant marginal utility of money
Bhomogeneous units
Cindependent utility
Dcardinal measurability
Answer & Solution
Correct answer: C. independent utility
1. The hypothesis of independent utility states that total utility is just the sum of separate utilities of the goods.
2. It ignores complementarity between goods.
3. Cardinal measurability, constancy of MU of money, and homogeneity of units are separate assumptions, so those options are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.3_
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