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One Of The Assumptions Of Ordinal Utility Theory Is That? - Erudites Academy

One of the assumptions of ordinal utility theory is that?

A. choice is not consistent
B. utility can be ranked
C. total utility is a function of price
D. satisfaction is measurable

Correct Answer:

Option B – utility can be ranked

Explanation

An ordinal utility function is a function representing the preferences of an agent on an ordinal scale. Ordinal utility theory claims that it is only meaningful to ask which option is better than the other, but it is meaningless to ask how much better it is or how good it is. This means that utility can only be ranked and not measured as claimed by other theories.

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