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Classical utility theory is satisfying needs and wants. It is an important concept in the economics and game theory.
How would you answer if someone says that “marginal utility theory is useless because utility cannot be observed”?
give the limitations of cardinal utility theory
Firstly, theory assumes that it is possible to assign numerical values to utility. the theory happens to a single commodity model, in which the utility of one commodity is treated as being totally independent of the utility of the other commodities.
The paradox of value is explained by the concept of marginal utility, which states that the value of a good is determined by its marginal utility rather than its total utility. For example, water has a high total utility as it is essential for life, but its marginal utility is low because in most situations there is an abundance of water. Conversely, diamonds have a low total utility but a high marginal utility due to their scarcity, leading to a higher market value despite their limited practical use.
Some criticisms of Marshall's utility theory include its reliance on the subjective nature of utility, the assumption of rational decision-making by individuals, and the lack of consideration for societal influences on preferences and choices. Additionally, critics argue that the theory's focus on individual utility maximization may not accurately capture the complexity of human behavior and decision-making.
No
Anything that many want but few have will have high value. Things that are difficult to make often have high value. But for something to have value it must have UTILITY.
Charles Blackorby has written: 'A sceptical exposition of the expected utility hypothesis' -- subject(s): Utility theory
the desirability or worth utility.
ratio of a distance.
The Theory of Investment Value was created in 1938.