Sita and Geeta are two close friends and both are graduate working women. Sita is an economic graduate and doing research in economics while Geeta is a customer relation manager in a multinational company. In 1sy January, 2023 both the friends decide to go out for a dinner to celebrate new year. Geeta is fond of Ice-Cream (Orange bar) and has decided to but from a street vendor ₹10 unit after discount. She has also offered to Sita but Sita denied as having throat infection.

Geeta has requested to Sita to apply economics principles and to respond, when she should be stopped consuming more ice-cream. On consuming 3rd unit of Ice-cream, Geeta has obtained additional satisfaction of 18 units while the marginal utility of a rupee is 2 utils.

Identify the approach through which Geeta seeking to obtain her state of rest with respect to consuming ice-cream.

Cardinal Approach

The correct answer is option (2) : Cardinal Approach

Explanation:

• The cardinal approach to utility theory assigns numerical values (utils) to represent the level of satisfaction or utility that individuals derive from consuming goods and services.
• In this case, Geeta's decision-making process involves comparing the marginal utility (satisfaction) she derives from consuming each additional unit of ice-cream against its price. This comparison allows her to determine whether to consume more or less ice-cream until she reaches her desired level of satisfaction or utility.