bl False (pick the best answer) a) Cardinal scales, unlike ordinal scales, provi

Question

bl False (pick the best answer) a) Cardinal scales, unlike ordinal scales, provide no information about the relative strength of preference of the decision maker. [4%] b) Assuming attribute independence among the attributes, y's, the assessment of a 2-dimensional utility function is simplified to that of2 one-dimensional functions: y) = g[v, y,), voo] 4% c) One needs to compute the "certainty equivalent" before determining the correct amount of insurance to buy, since proper insurance should cover the expected value of a loss. 14% T F

Explanation / Answer

a) The answer is given below:

False

The cardinal scale ensures on finding correspondent value of the goods comparing with the other values, so that the decision can be taken through cardinal scale on comparison.

b)The answer is given below:

True

The utility function is a mathematical function that alternate the ranks from the assessment that is simplified.

c) The answer is given below:

True

The individual needs to compute certainty equivalent to avoid risk on purchasing the insurance.

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