Question

In the following Question, read the following statement and choose the correct alternative among those given below:

Statement 1: According to Ordinal Utility Approach, utility can be numerically estimated, which a person derives from consumption of goods and services. 

Statement 2: Utility is subjective and it varies from person to person.

Options

• Both the Statements are true.

• Both the Statements are false.

• Statement 1 is true and Statement 2 is false.

• Statement 2 is true and Statement 1 is false.

Answer 1

Statement 2 is true and Statement 1 is false.

Explanation:

The ordinal approach ranks preferences; it does not measure utility numerically, so Statement 1 is false. Utility is subjective and varies between people, so Statement 2 is true.