What is a Scale of Preference in Economics?

What is the meaning of a Scale of Preference?

One of the most common economic terms is a Scale of Preference. A scale of preference can be defined as the list of wants or needs that a person writes or comes up with in order of importance.

Here, the person puts his or her most pressing needs or wants at the top of the list and then the less important needs go to the bottom of the list.

An example of a scale of preference:

ITEM	VALUE($)
Computer	500.00
Mobile Phone	100.00
Pair of Shoes	50.00
MP3 Player	50.00
Bag	85.00

 

The table above is an example of a Scale of Preference. From this table, the person’s most important needs or wants have been placed at the top of the table with the less important ones at the bottom. According to this person, his most important need is a computer and then a mobile phone. The bag is his least pressing want so he puts it at the bottom of the table.

Let us assume that the person had only $600.00 to spend, he would be able to purchase the computer and the mobile phone only; the rest of the items that he cannot purchase will therefore be called the opportunity cost. There is absolutely no way the person would purchase anything in the list before purchasing the computer.

This is basically what the economic term Scale of Preference refers to.