Which of the following approach assumes that utility can be measured in terms of number like 1, 2, 3, 4 & 5?

Cardinal Approach

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Ordinal Approach

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Either (A) or (B)

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Both (A) & (B)

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Solution

The correct option is C Cardinal Approach
In the cardinal approach, the consumer measures his utility in terms of cardinal numbers so that he can compare these utilities with the prices that are prevalent in the market to make an absolute rational decision.

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