Question

1. Ordinal concept of utility expresses utility in terms of:
(a) Units (b) Level of satisfaction (c) Constants (d) None of these​

Answer 1

Ordinal concept of utility expresses utility in terms of (b) Level of satisfaction.

What is ordinal concept of utility?

• According to the ordinal concept of utility, one can ponder over which option is better than the other option. However, how much one option is better than another is useless.
• We can grade satisfaction to high or low but we cannot determine how satisfied or dissatisfied we are with something in units. For example, we never can say that a clean room has given us 3 units of satisfaction as compared to a dirty room.

Hence, the correct option is b) Level of satisfaction  

Answer 2

The ordinal concept of utility expresses utility in the form of a level of satisfaction.

• It is the utility in terms of preference for level of satisfaction. It measures the utility in terms of ranks like high or low or more or less.
• For example, we can say a of fresh fruit can give the ordinal utility more than a rotten one
• The ordinal utility approach is based on the fact that the utility of a commodity cannot be measured in absolute quantity.