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Which of the following statements regarding ordinal utility is true?
- a)Utility can be measured, but cannot be ranked in order of preferences.
- b)Utility can neither be measured nor can 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)...
In ordinal utility, the consumer only ranks choices in terms of preference but we do not give exact numerical figures for utility.
For example, we prefer a BMW car to a Nissan car, but we don’t say by how much.
For example, we prefer a BMW car to a Nissan car, but we don’t say by how much.
Most Upvoted Answer
Which of the following statements regarding ordinal utility is true?a)...
In ordinal utility, the consumer only ranks choices in terms of preference but we do not give exact numerical figures for utility.
For example, we prefer a BMW car to a Nissan car, but we don’t say by how much.
For example, we prefer a BMW car to a Nissan car, but we don’t say by how much.
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Community Answer
Which of the following statements regarding ordinal utility is true?a)...
Explanation:
Ordinal utility refers to the concept in economics that allows individuals to rank their preferences for different goods and services. It is based on the idea that individuals can determine the relative satisfaction or preference they have for different options, but not the absolute level of utility or satisfaction.
Measurement of Utility:
- Utility is a subjective concept and cannot be measured objectively. It is a mental state or satisfaction derived from consuming a good or service.
- Utility cannot be quantified or assigned a numerical value. It varies from person to person and depends on various factors such as preferences, tastes, and circumstances.
- Therefore, option A is incorrect as utility cannot be measured.
Ranking of Preferences:
- Ordinal utility theory suggests that individuals can rank their preferences for different goods and services.
- This means that individuals can determine which option they prefer more than another, without necessarily knowing the exact level of utility associated with each option.
- For example, a person may prefer pizza to burgers, but they do not necessarily know the specific amount of satisfaction they derive from each.
- Therefore, option D is correct as utility can be ranked in order of preferences.
Importance of Ordinal Utility:
- Ordinal utility is a fundamental concept in consumer theory as it helps economists understand and analyze consumer behavior and choices.
- By recognizing that individuals can rank their preferences, economists can make predictions and recommendations about consumer choices and market demand.
- For example, economists can use ordinal utility to analyze the impact of changes in prices or income on consumer choices and determine how consumers will allocate their resources.
- Ordinal utility also helps in the development of demand curves and understanding consumer surplus.
- Overall, ordinal utility provides a useful framework for understanding and analyzing consumer behavior and choice.
Conclusion:
In conclusion, utility can be ranked in order of preferences, but it cannot be measured objectively. Ordinal utility theory allows individuals to determine their preferences and rank them, providing insights into consumer behavior and choice. Therefore, option D is the correct statement regarding ordinal utility.
Ordinal utility refers to the concept in economics that allows individuals to rank their preferences for different goods and services. It is based on the idea that individuals can determine the relative satisfaction or preference they have for different options, but not the absolute level of utility or satisfaction.
Measurement of Utility:
- Utility is a subjective concept and cannot be measured objectively. It is a mental state or satisfaction derived from consuming a good or service.
- Utility cannot be quantified or assigned a numerical value. It varies from person to person and depends on various factors such as preferences, tastes, and circumstances.
- Therefore, option A is incorrect as utility cannot be measured.
Ranking of Preferences:
- Ordinal utility theory suggests that individuals can rank their preferences for different goods and services.
- This means that individuals can determine which option they prefer more than another, without necessarily knowing the exact level of utility associated with each option.
- For example, a person may prefer pizza to burgers, but they do not necessarily know the specific amount of satisfaction they derive from each.
- Therefore, option D is correct as utility can be ranked in order of preferences.
Importance of Ordinal Utility:
- Ordinal utility is a fundamental concept in consumer theory as it helps economists understand and analyze consumer behavior and choices.
- By recognizing that individuals can rank their preferences, economists can make predictions and recommendations about consumer choices and market demand.
- For example, economists can use ordinal utility to analyze the impact of changes in prices or income on consumer choices and determine how consumers will allocate their resources.
- Ordinal utility also helps in the development of demand curves and understanding consumer surplus.
- Overall, ordinal utility provides a useful framework for understanding and analyzing consumer behavior and choice.
Conclusion:
In conclusion, utility can be ranked in order of preferences, but it cannot be measured objectively. Ordinal utility theory allows individuals to determine their preferences and rank them, providing insights into consumer behavior and choice. Therefore, option D is the correct statement regarding ordinal utility.
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Which of the following statements regarding ordinal utility is true?a)Utility can be measured, but cannot be ranked in order of preferences.b)Utility can neither be measured nor can 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 be measured, but cannot be ranked in order of preferences.b)Utility can neither be measured nor can 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 be measured, but cannot be ranked in order of preferences.b)Utility can neither be measured nor can 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 be measured, but cannot be ranked in order of preferences.b)Utility can neither be measured nor can 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?.
Which of the following statements regarding ordinal utility is true?a)Utility can be measured, but cannot be ranked in order of preferences.b)Utility can neither be measured nor can 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 be measured, but cannot be ranked in order of preferences.b)Utility can neither be measured nor can 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 be measured, but cannot be ranked in order of preferences.b)Utility can neither be measured nor can 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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