In cardinal utility analysis
A) numbers can be assigned to utility.
B) it is recognized that numbers can not be assigned to utility.
C) the concept of marginal utility exists while in ordinal utility analysis marginal utility does not exist.
D) marginal utility always increases as more of a good is consumed.

Question

Quizplus · Accepted Answer

In cardinal utility analysis, numbers can be assigned to utility, allowing for precise measurement and comparison.

Option B is incorrect because ordinal utility analysis recognizes the order, or ranking, of preferences but does not assign specific numbers to utility.

Option C is incorrect because both cardinal and ordinal utility analysis recognize the concept of marginal utility, which is the additional utility gained from consuming one more unit of a good.

Option D is incorrect because marginal utility can decrease as more of a good is consumed, leading to the law of diminishing marginal utility.

In Cardinal Utility Analysis