If we represent an agent's preferences by a(n) __________ utility function, then the way we number the agent's indifference curves does not affect the demands made by the agent.
A) ordinary
B) cardinal
C) ordinal

Question

Quizplus · Accepted Answer

When we represent an agent's preferences by an ordinal utility function, we are only concerned with the ranking of bundles of goods in terms of the agent's preferences. The specific numerical values assigned to each bundle do not matter; all that matters is the ordering. Therefore, the way we number the agent's indifference curves, which represent bundles that provide equal levels of utility to the agent, does not affect the demands made by the agent.

If We Represent an Agent's Preferences by A(n) __________ Utility