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JAMB Economics 2004 Question 39

Question 39

Theory of Consumer Behaviour

One of the assumptions of ordinal utility in consumer behaviour is that

  1. A.consumers are irrational;
  2. B.marginal utility rises continuously
  3. C.utility is measurable
  4. D.utility can only be ranked
Show the answer and explanation

Answer: D (utility can only be ranked)

Explanation

Ordinal utility theory (indifference curves) assumes consumers can rank combinations in order of preference, not measure utility in units.