Use the following two statements to answer this question:
I. If utility is ordinal, a market basket that provides 30 utils provides twice the satisfaction of a market basket that provides 15 utils.
II. When economists first studied utility it was believed that utility was cardinal, but it was later discovered that ordinal preferences are sufficient to explain how most individual decisions are made.
A) Both I and II are true.
B) I is true, and II is false.
C) I is false, and II is true.
D) Both I and II are false.

Question

Quizplus · Accepted Answer

Ordinal utility does not measure the exact level of satisfaction, so statement I is false. Statement II is true as ordinal preferences are sufficient for explaining individual decisions.

Use the Following Two Statements to Answer This Question