Which of the following is an approach to explain consumer behaviour?
Answer & explanation
Correct answer: option 4
Cardinal and ordinal utility analysis are two types of approaches for utility analysis.
- Cardinal utility analysis measures the utility in the form of numbers. For example: 1 mango gives 50 utils of satisfaction.
- Ordinal utility analysis measures the utility in the form of ranks. For example: Burger King is better than McDonalds, which means that Burger King has a better rank than McDonalds.