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Which of the following statements regarding ordinal utility is true?
- a)Utility can neither be measured nor can be ranked in order of preferences.
- b)Utility can be measured, but cannot be ranked in order of preferences.
- c)Utility can be measured and can also be ranked in order of preferences.
- d)Utility cannot be measured, but can be ranked in order of preferences.
Correct answer is option 'D'. Can you explain this answer?
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Verified Answer
Which of the following statements regarding ordinal utility is true?a)...
The Ordinal Utility approach is based on the fact that the utility of a commodity cannot be measured in absolute quantity, but however, it will be possible for a consumer to tell subjectively(by ranking) whether the commodity derives more or less or equal satisfaction when compared to another.
Most Upvoted Answer
Which of the following statements regarding ordinal utility is true?a)...
Ordinal utility refers to the concept of ranking preferences
Ordinal utility is a theory in economics that focuses on the ranking of preferences rather than the measurement of utility. It suggests that individuals can determine their preferences for different goods and services, but they cannot assign specific numerical values to the level of satisfaction or happiness derived from consuming these goods and services. Instead, individuals can only rank their preferences in terms of what they like or dislike.
Explanation of the correct answer: Option 'D'
Option 'D' states that utility cannot be measured but can be ranked in order of preferences. This statement is true because ordinal utility theory emphasizes the ranking of preferences without assigning specific numerical values to utility.
Utility cannot be measured:
Under ordinal utility theory, utility is considered a subjective and unmeasurable concept. It is impossible to quantify the level of satisfaction or happiness a person derives from consuming a particular good or service. Utility is based on individual preferences and varies from person to person.
Utility can be ranked in order of preferences:
Although utility cannot be measured, individuals can still rank their preferences. They can determine whether they prefer one good or service over another, or whether they are indifferent between two or more choices. This ranking provides valuable information regarding an individual's preferences and helps in decision-making.
Example:
For instance, suppose a person is given the choice between a slice of pizza and a hamburger. Even though they cannot measure the level of utility they derive from each option, they can still rank their preferences. They may prefer the pizza over the hamburger, indicating a higher preference for pizza. This ranking is based on their subjective assessment of their preferences.
Conclusion:
In summary, the correct statement regarding ordinal utility is option 'D' - utility cannot be measured, but it can be ranked in order of preferences. This understanding of ordinal utility theory helps in analyzing consumer behavior, decision-making, and understanding individual preferences.
Ordinal utility is a theory in economics that focuses on the ranking of preferences rather than the measurement of utility. It suggests that individuals can determine their preferences for different goods and services, but they cannot assign specific numerical values to the level of satisfaction or happiness derived from consuming these goods and services. Instead, individuals can only rank their preferences in terms of what they like or dislike.
Explanation of the correct answer: Option 'D'
Option 'D' states that utility cannot be measured but can be ranked in order of preferences. This statement is true because ordinal utility theory emphasizes the ranking of preferences without assigning specific numerical values to utility.
Utility cannot be measured:
Under ordinal utility theory, utility is considered a subjective and unmeasurable concept. It is impossible to quantify the level of satisfaction or happiness a person derives from consuming a particular good or service. Utility is based on individual preferences and varies from person to person.
Utility can be ranked in order of preferences:
Although utility cannot be measured, individuals can still rank their preferences. They can determine whether they prefer one good or service over another, or whether they are indifferent between two or more choices. This ranking provides valuable information regarding an individual's preferences and helps in decision-making.
Example:
For instance, suppose a person is given the choice between a slice of pizza and a hamburger. Even though they cannot measure the level of utility they derive from each option, they can still rank their preferences. They may prefer the pizza over the hamburger, indicating a higher preference for pizza. This ranking is based on their subjective assessment of their preferences.
Conclusion:
In summary, the correct statement regarding ordinal utility is option 'D' - utility cannot be measured, but it can be ranked in order of preferences. This understanding of ordinal utility theory helps in analyzing consumer behavior, decision-making, and understanding individual preferences.
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Which of the following statements regarding ordinal utility is true?a)Utility can neither be measured nor can be ranked in order of preferences.b)Utility can be measured, but cannot be ranked in order of preferences.c)Utility can be measured and can also be ranked in order of preferences.d)Utility cannot be measured, but can be ranked in order of preferences.Correct answer is option 'D'. Can you explain this answer?
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Which of the following statements regarding ordinal utility is true?a)Utility can neither be measured nor can be ranked in order of preferences.b)Utility can be measured, but cannot be ranked in order of preferences.c)Utility can be measured and can also be ranked in order of preferences.d)Utility cannot be measured, but can be ranked in order of preferences.Correct answer is option 'D'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Which of the following statements regarding ordinal utility is true?a)Utility can neither be measured nor can be ranked in order of preferences.b)Utility can be measured, but cannot be ranked in order of preferences.c)Utility can be measured and can also be ranked in order of preferences.d)Utility cannot be measured, but can be ranked in order of preferences.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements regarding ordinal utility is true?a)Utility can neither be measured nor can be ranked in order of preferences.b)Utility can be measured, but cannot be ranked in order of preferences.c)Utility can be measured and can also be ranked in order of preferences.d)Utility cannot be measured, but can be ranked in order of preferences.Correct answer is option 'D'. Can you explain this answer?.
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