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Microeconomics

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Moderate

Ordinal and/or Cardinal Utility

MICRO-IEYPYO

Consider Paige's preferences for Goods $L$, $M$, and $N$. She has the following preferences: $L \succ M \succ N$. Of course, this can be represented by a utility function (or utility functions, for that matter). Let's say utility function $u$ gives us the following values to Paige when she consumes $L$, $M$, or $N$:

$$u(L) = 10, u(M) = 5, u(N)= 1$$

While the utility function $v$ results in the following values for the goods:

$$v(L) = 100, v(M) = 55, v(N)= 1$$

Are these two functions $u$ and $v$ ordinally equivalent, cardinally equivalent, both, or neither?

A

These two functions are only ordinally equivalent.

B

These two functions are only cardinally equivalent.

C

These two functions are both ordinally and cardinally equivalent.

D

These two functions are neither ordinally or cardinally equivalent.