Question

Who gave the ordinal theory of utility?

• A. Marshall
• B. Pigou
• C. Hicks
• D. Ricardo

Hint:

The ordinal theory of utility, developed by Hicks, emphasizes that utility is a ranking of preferences rather than a measurable quantity.

Answer 1

The Correct Option is C

Step 1: Understanding the Ordinal Theory of Utility:
The ordinal theory of utility, developed by Sir John Hicks and others, states that utility cannot be measured in absolute terms but can be ranked in order of preference. This approach contrasts with the cardinal theory of utility, which assumes that utility can be measured in numerical terms.
Step 2: Key Contributions:
- Marshall: Although Marshall contributed significantly to the study of consumer theory and utility, he was more closely associated with the cardinal utility approach.
- Pigou: Pigou expanded on welfare economics and supported the idea of measurable utility but did not pioneer the ordinal utility theory.
- Hicks: John Hicks, along with Roy Allen, is known for developing the ordinal theory of utility. Hicks emphasized that individuals rank their preferences without assigning specific numerical values to them.
- Ricardo: Ricardo focused more on theories of value and distribution, especially related to the labor theory of value, rather than utility theory.
Step 3: Conclusion:
John Hicks is credited with the development of the ordinal theory of utility, which is widely accepted in modern microeconomics.