Which of the following utility approach is based on the theory of Alfred Marshall?a)None of theseb) Ordinal utility approachc) Independent variable approachd) Cardinal utility approachCorrect answer is option 'D'. Can you explain this answer?

Question

Which of the following utility approach is based on the theory of Alfred Marshall?a)None of theseb) Ordinal utility approachc)  Independent variable approachd) Cardinal utility approachCorrect answer is option 'D'. Can you explain this answer?

Answer

Alfred Marshall was the dominant figure in British economics from about 1890 until his death in 1924.His specialty was microeconomics—the study of individual markets and industries, as opposed to the study of the whole economy.
It was Alfred Marshall who first discussed the role played by the theory of utility in the theory of value. In Marshall's theory, the concept of utility is cardinal.

Answer

Correct answer is D

Answer

Alfred Marshall was the dominant figure in British economics from about 1890 until his death in 1924.His specialty was microeconomics—the study of individual markets and industries, as opposed to the study of the whole economy.
It was Alfred Marshall who first discussed the role played by the theory of utility in the theory of value. In Marshall's theory, the concept of utility is cardinal.

Answer

Cardinal utility approach is the utility approach based on the theory of Alfred Marshall.

Explanation:

Alfred Marshall was an influential economist who made significant contributions to the field of economics, particularly in the area of utility theory. He developed the concept of cardinal utility, which forms the basis of the cardinal utility approach.

1. Alfred Marshall and Utility Theory:
- Alfred Marshall was one of the pioneers of utility theory, which seeks to explain how individuals make choices based on the satisfaction or happiness they derive from consuming goods and services.
- Marshall recognized that individuals have preferences for different goods and services and that these preferences can be measured and compared using a utility scale.
- His theory of utility focused on the idea that individuals assign cardinal numbers to the satisfaction or utility they derive from consuming goods and services.

2. Cardinal Utility Approach:
- The cardinal utility approach is based on the assumption that utility can be measured and quantified.
- According to this approach, individuals are able to assign specific numerical values to the utility they derive from consuming different goods and services.
- These numerical values are used to compare the preferences and satisfaction levels of individuals.
- The cardinal utility approach allows for the construction of utility functions, which represent the relationship between the quantities of goods consumed and the level of satisfaction or utility derived.
- By analyzing these utility functions, economists can make predictions about consumer behavior and market demand.

3. Comparison with Other Utility Approaches:
- In contrast to the cardinal utility approach, the ordinal utility approach does not require the measurement or quantification of utility.
- The ordinal utility approach focuses on the ranking or ordering of preferences, rather than assigning numerical values.
- The independent variable approach is not a utility approach but refers to the analysis of the relationship between independent variables (such as price, income, etc.) and the quantity demanded of a good or service.

In conclusion, the utility approach based on the theory of Alfred Marshall is the cardinal utility approach, which involves the measurement and quantification of utility.

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