Question

Distinguish between cardinal utility approach and ordinal utility approach to consumer
behavior. How can a consumer attain equilibrium under ordinal utility approach? Explain
with the help of diagram. Ans about in 500 words

Answer 1

$42 \times 2. \div 2 <$

Answer 2

Utility:

Utility is defined as the psychological factor, which provides the strength of goods or services. According to the attitude of the person, utility changes from person to person.

There are two principle theories for utility which are cardinal utility and ordinal utility.

The difference between cardinal utility approach and ordinal utility approach are given below.

Cardinal utility:

• Cardinal utility was organized by Neo-classical economists, who held that utility is measurable and can be expressed either cardinally or quantitatively.
• Utility cannot be measured numerically; they can be measured by various factors like mood, interest, preferences, taste, and so on.

Ordinal utility:

• Ordinal utility projects the usage of a commodity by means of ‘more than’ or ‘lesser than’. The measurement of utility is done ordinal.
• Cardinal utility is the utility which cannot be measured quantitatively or numerically, but they can put forth their opinion by preferences of the consumer.