alleryThe indifference curve analysis of demand treats utility as a concept that is:
Aexpressed in money utils
Bconstant across all goods
Ccardinal and measurable
Dordinal and based on ranking
Answer & Solution
Correct answer: D. ordinal and based on ranking
1. Indifference curve analysis assumes utility is only ordinally expressible.
2. The consumer can rank combinations as first, second and so on, but cannot say by how much.
3. Cardinal measurability and money-utils belong to Marshall's approach, and utility is not constant across goods, so those options are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.12_
Keep practising Theory of Consumer Behaviour & Demand
Browse all Theory of Consumer Behaviour & Demand questions for CA Foundation, or explore more Economics topics.
Related questions
Tap what can shift the demand curveNormal good or inferior good?Which one does NOT belong?True or false: indifference curvesMatch each consumer term to its meaningA point lying inside (below) the budget line indicates that the consumer is:The slope of the budget line is determined by the:Two indifference curves can never intersect each other because intersection would imply th