Question

According to the _____________, a consumer has a given scale of preference for different combinations of two goods. It is assumed that consumer can rank the goods like 1st, 2nd, 3rd, 4th.

• A. Cardinal Approach
• B. Ordinal Approach
• C. Either (A) or (B)
• D. None of above

Answer 1

Answer: (B)

Ordinal Approach

According to ordinal approach of utility, the consumer measures the utility of a commodity as high or low. Therefore, when different combinations are provided to the consumers they feel indifferent about all the combinations of the product and rank them according to their preference given the price of the commodities and budget of the consumers.