The correct answer is: Ordinal utility.
Ordinal utility is a concept in economics that states that consumers can rank their preferences for different goods and services, but they cannot assign specific numerical values to those preferences. This means that consumers can say that they prefer A to B, or that they are indifferent between A and B, but they cannot say that they prefer A to B by a factor of 2.
Ordinal utility is the basis for indifference curve analysis, which is a tool used to analyze consumer behavior. Indifference curves are curves that show all the combinations of goods and services that a consumer would be equally happy with. The slope of an indifference curve indicates the marginal rate of substitution, which is the rate at which a consumer is willing to trade one good for another.
The other options are incorrect because:
- Independent utility is the concept that the utility a consumer derives from one good is not affected by the consumption of another good. This is not a necessary assumption for indifference curve analysis.
- Cardinal utility is the concept that consumers can assign specific numerical values to their preferences for different goods and services. This is not a necessary assumption for indifference curve analysis.
- Diminishing marginal utility is the concept that the additional utility a consumer derives from consuming one more unit of a good declines as the consumer consumes more of that good. This is a concept that is often used in indifference curve analysis, but it is not a necessary assumption.