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_______approach to utility was advocated by Hicks, Allen and Pareto.
- a)Cardinal approach
- b)Contingency approach
- c)Diminishing approach
- d)Ordinal approach
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
_______approach to utility was advocated by Hicks, Allen and Pareto.a)...
The correct answer is Ordinal approach.
Key Points
- Ordinal Utility states that the satisfaction a consumer gets after consuming a good or service cannot be scaled in numbers, whereas, these things can be arranged in the order of preference.
- Edgeworth first developed a more scientific approach to the study of consumer behavior, known as the “Indifference Curve Approach” in1881.
- In 1906, Vilfredo Pareto modified the “Edgeworth Approach”.
- Again J.R.Hicks and R.G.D.Allen refined the Indifference Curve Approach in 1934.
- Later, in 1939 J.R.Hicks in his book “ Value and Capital” gave a final shape to this “Indifference Curve Analysis” or ordinal approach.
- According to the ordinal approach, utility is a psychological phenomenon like happiness, satisfaction, and welfare.
- The ordinal theory is highly subjective and differs across individuals.
- Therefore, it cannot be measured in quantifiable terms.
- The function that represents the utility of a product according to its preference, but does not provide any numerical figure, is known as an Ordinal Utility.
- In simpler words, this theory affirms that it is relevant to ask which item is better as compared to others instead of how good is that product.
Most Upvoted Answer
_______approach to utility was advocated by Hicks, Allen and Pareto.a)...
The correct answer is Ordinal approach.
Key Points
- Ordinal Utility states that the satisfaction a consumer gets after consuming a good or service cannot be scaled in numbers, whereas, these things can be arranged in the order of preference.
- Edgeworth first developed a more scientific approach to the study of consumer behavior, known as the “Indifference Curve Approach” in1881.
- In 1906, Vilfredo Pareto modified the “Edgeworth Approach”.
- Again J.R.Hicks and R.G.D.Allen refined the Indifference Curve Approach in 1934.
- Later, in 1939 J.R.Hicks in his book “ Value and Capital” gave a final shape to this “Indifference Curve Analysis” or ordinal approach.
- According to the ordinal approach, utility is a psychological phenomenon like happiness, satisfaction, and welfare.
- The ordinal theory is highly subjective and differs across individuals.
- Therefore, it cannot be measured in quantifiable terms.
- The function that represents the utility of a product according to its preference, but does not provide any numerical figure, is known as an Ordinal Utility.
- In simpler words, this theory affirms that it is relevant to ask which item is better as compared to others instead of how good is that product.
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_______approach to utility was advocated by Hicks, Allen and Pareto.a)Cardinal approachb)Contingency approachc)Diminishing approachd)Ordinal approachCorrect answer is option 'D'. Can you explain this answer?
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