The marshallian utility analysis is based on a less valid assumption of
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Answer:
Explanation:
Marginal utility of money
Marshall’s idea of constant utility of money just happens to be impractical. With his assumption of constant marginal utility of money, Marshall was unable to figure out the ‘income effects’ of a price change. Hence, he was unable to differentiate between ‘substitution’ and ‘income’ effects that are the two elements of ‘Price-effect’. Because of this, Marshall failed to produce any adequate details for Giffen Paradox. By splitting the price effect into income and substitution effects, Hicks makes it possible for us to enunciate substantially more general demand theorem. When it comes to Giffen goods, the negative income effect is stronger to overshadow the positive substitution effect; hence, the buyer purchases less of the particular commodity while the price decreases.