Question

5) Use the following statements to answer this question.

Please provide correct answer with explanation

I.    The numerical labels attached to indifference curves are meaningful only in an ordinal way.

II. The numerical labels attached to isoquants are meaningful only in an ordinal way.

A) both I and II are true.

B) I is true, and II is false.

C) I is false, and II is true.

D) both I and II are false.

Answer 1

I. Statement is true

II. Statement is false

So, option B) is correct

The labels attached to the Indifference curve are equal to vertical and horizontal intercepts. As the higher IC curve gives higher level of satisfaction, Label 2 will give more satisfaction that label 1 and label 3 will give more satisfaction than label 2. This satisfaction is in terms of ordinal utility. So, the statement I is True

Isoquants are similar to indifference curves. Isoquants order the different levels of output and each isoquant signify a particular level of output. As we move to the higher isoquant, then the higher level of output is attained. These different output levels are quantified and are not represented in an ordinal fashion. For example:

Isoquant 1 : q1 = 50

Isoquant 2 : q2 = 70

so on and so forth.
So, Statement II is false