The theory that assumed that each area of the brain is associated with a different faculty, and that the shape of the skull reflects the relative strengths of those areas is called

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The theory described in the question is phrenology, which is based on the idea that different areas of the brain are responsible for different personality traits or abilities, and that the shape of the skull reflects the development of those areas. It was popular during the 19th century, but its scientific validity has been widely discredited.

The Theory That Assumed That Each Area of the Brain