Use the following statements to answer this question. I. The numerical labels attached to indifference curves are meaningful only in an ordinal way.
II) The numerical labels attached to isoquants are meaningful only in an ordinal way.
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

Statement I is true because indifference curves represent a ranking of preferences, not a measurement of utility. Therefore, the numerical labels attached to indifference curves are only meaningful in terms of the ranking they represent, not in an absolute sense.
Statement II is false because isoquants represent levels of output that can be produced using different combinations of inputs. The numerical labels attached to isoquants represent an absolute level of output, not just a ranking. Therefore, the numerical labels attached to isoquants are meaningful in a cardinal as well as an ordinal way.

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