M7

Question 1

a consumer attempts to allocate
his/her limited money income among
available goods and services so as to
maximize his/her utility (satisfaction).

Answer 1

Theory of Consumer Behavior

Question 2

Theories of Consumer Choice

Answer 2

• The Cardinal Theory
• The Ordinal Theory

Question 3

Nineteenth century economists, such as Jevons, Menger and Walras, assumed that utility was
measurable in a cardinal sense,

Answer 3

Cardinal Approach

Question 4

Economists following the lead of Hicks,
Slutsky and Pareto believe that utility is
measurable in an ordinal sense–

Answer 4

The Ordinal Approach