Why do we say that the utility theory has ordinal utility?
A)It is designed to study relative satisfaction levels.
B)It cannot be explained without the expected utility theory.
C)It dictates that people should behave in the manner prescribed by it.
D)It can represent the absolute level of satisfaction.
E)It does not base its beliefs upon individuals' preferences.

Question

Quizplus · Accepted Answer

Utility theory is considered to have ordinal utility because it focuses on the ranking or ordering of preferences and choices rather than quantifying the absolute level of satisfaction or utility. It is concerned with how options are relatively valued or preferred over others, not with measuring the exact level of satisfaction derived from those options.

Why Do We Say That the Utility Theory Has Ordinal