Abstract
A basic assumption of neoclassical macroeconomic theory is that in a market economy, consumers choose bundles of goods to maximize their budget-constrained utilities. A direct conclusion of this assumption is that in picking up their optimal bundles, consumers set their marginal utilities in proportion to the market prices of the goods consumed. In this paper, we show this type of behavior to contradict any behavioral pattern that is consistent with the second law of thermodynamics. This makes the “neoclassical consumer” the only system so far known to be able to evade the governance of this law. Should real consumers behave in agreement with the second law, their demands cannot satisfy the proportionality condition, and their marginal utilities cannot be determined solely by the prices. Since no real system has been found to violate the second law, and it is unlikely that one will ever be found, the need to revise consumer theory is there, even if empirically it has not yet been tested and refuted.
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