Question

In economic theory, utility can be measured by -
1. Cardinal Approach
2. Ordinal Approach
Select the correct answer from the options given below -

• A. Neither I nor 2
• B. 1 only
• C. Either 1 or 2
• D. 2 only

Answer 1

The correct option is C Either 1 or 2

In cardinal approach, utility is measured in terms of cardinal number i.e. 1,2,3 etc by the consumers to take an absolutely rational decision whether to buy the product or not whereas in ordinal approach utility in measured as high or low under the belief that consumer does not act very rationally in order to convert its utility into numbers.