What is the difference between cardinal and ordinal utility. He has used a tool, called indifference curve, for consumer behavior analysis. Ordinal utility approach definition and explanation of. Ordinal utility is a qualitative method that is used to measure consumption satisfaction. On ordinal utility, cardinal utility and random utility. Difference between cardinal and ordinal utility with. Conversely, ordinal utility approach pioneered by hicks and allen. Modem economists, particularly hicks gave ordinal utility concept to analyze consumer behavior. This approach also explains the consumers equilibrium who is confronted with the multiplicity of objectives and scarcity of money income. Recently, cardinal utility approach to the theory of demand has been subjected to severe criticisms and as a result some alternative theories, namely, indifference curve analysis, samuelsons revealed preference theory, and hicks logical weak ordering theory have been propounded. Get an answer for discuss the cardinal utility theory. The ordinal utility approach is based on the following assumptions.
On the contrary, the ordinal utility is measured in terms of ranking of preferences of a commodity when compared to each other. Cardinal and ordinal approach free download as powerpoint presentation. On ordinal utility, cardinal utility, and random utility. Cardinal utility approach propounded by alfred marshall and his followers. Implies that a consumer is a rational being and aims at maximizing the total satisfaction given the. Cardinal and ordinal utility are theories that are used to explain the levels of satisfaction that a consumer derives from the consumption of goods and services. Ordinal theory is also known as neoclassical theory of consumer equilibrium, hicksian theory of consumer behavior, indifference curve theory, optimal choice theory.
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