When discussing cardinal vs. ordinal, it is helpful to look at what the words mean. The distinguishing factor here is between cardinal and ordinal numbers. Cardinal numbers are 1, 2, 3; ordinal numbers, 1st, 2nd, 3rd. Some crucial differences follow from that. Whereas mathematical operations can be performed on cardinal numbers, they cannot be performed on ordinal numbers. Now, when talking about cardinal utility, it is an attempt to ''measure the utility of various alternatives. When talking about ordinal utility, it is the ''ranking of alternatives.'''' Cardinal utility is, however, an erroneous concept. It is impossible to "measure" utility. People can only say "I prefer A to B", but cannot meaningfully say "I prefer A 2.5 times more than B" or something to that effect. Furthermore, comparisons of utility between different individuals are impossible and meaningless, as well as between the same individual at different points in time (as individuals can and do change their preferences -- that is, ordinal value-scale rankings). Because value is subjective, we cannot measure it and cannot compare between two different people, or even between the same person at different times. To clarify, ordinal utility culminates in value-scales: 1st: A
2nd: B
3rd: C whereas cardinal utility is the erroneous attempt at measurement: 10utils -- A
7utils -- B
3utils -- C
Omar Tawfik.
Utility means satisfaction that a consumer derives from commodities and services by purchasing different units of money. Cardinal utility means satisfaction that can be measured in numbers such as 1, 2, and 3. While ordinal utility refers to satisfaction, it cannot be measured in numbers.
Ordinal utility emphasizes ordering/rank of bundles of goods.
Cardinal utility emphasizes the size of the difference between two bundles of goods.
Cardinal utility states that the satisfaction that the consumer derives by consuming goods and services can be measured with numbers. Ordinal utility states that the satisfaction that the consumer derives from the consumption of goods and services cannot be measured in numbers. Secondly, whereas the cardinal utility is a quantitative measure, ordinal utility is a qualitative measure.
Cardinal Utility and Ordinal Utility are both concepts of economics. Cardinal Utility is the theory that implies that the utility gained from a product or service is measurable and the magnitude of measurement is meaningful. Whereas Ordinal Utility implies that the utility of a good or service cannot be measured by using an objective scale. Cardinal Utility is measurable and quantitative whereas Ordinal Utility is not measurable and is qualitative.
both obeys the law of diminishing marginal utility
the theory is base on the assumption that in a basket of commodities, an individual can differentiate and measure the amount of utility they derive from each commodity in the basket
Cardinal
A difference is that with ordinal utility approaches, you cannot numerically measure the level of consumer satisfaction. With cardinal utility approaches, you can to an extent.
cardinal utility
to what extent is ordinal utility approach and improvement cardinal in explaining consumer behaviour in economics
. Cardinal Approach refers that you can calculate or Measure the utility (degree of satisfaction) Numerically, while According to ordinal approach you can not measure the utility numerically. 2. Cardinal Approach follow the Law of Diminishing Marginal Utility while Ordinal Approach follow the Indifference Curve. 3.Cardinal Approach Emphasis on units while ordinal approach is based on rank.
Cardinal
Cardinal
A difference is that with ordinal utility approaches, you cannot numerically measure the level of consumer satisfaction. With cardinal utility approaches, you can to an extent.
cardinal utility
to what extent is ordinal utility approach and improvement cardinal in explaining consumer behaviour in economics
. Cardinal Approach refers that you can calculate or Measure the utility (degree of satisfaction) Numerically, while According to ordinal approach you can not measure the utility numerically. 2. Cardinal Approach follow the Law of Diminishing Marginal Utility while Ordinal Approach follow the Indifference Curve. 3.Cardinal Approach Emphasis on units while ordinal approach is based on rank.
1. Cardinal Approach refers that you can calculate or Measure the utility (degree of satisfaction) Numerically, while According to ordinal approach you can not measure the utility numerically. 2. Cardinal Approach follow the Law of Diminishing Marginal Utility while Ordinal Approach follow the Indifference Curve. 3.Cardinal Approach Emphasis on units while ordinal approach is based on rank. BY SUMIT SONI(IITTM)
The cardinal approach in a careful approach that states that utility is measurable. The ordinal approach disagrees with this theory.
Cardinal utility is seen in instances where satisfaction can be measured in numbers like 1, 2, 3 and for example, someone may prefer 2 hamburgers to 1. In ordinal utility, it is impossible to quantify the utility according to numbers, but here, preference and rank come to play. Someone would rate a bicycle lower than a motorcycle.
In consumer behavior, the satisfaction that consumers get by consuming commodities is utility. A cardinalist thinks that utility can be measured, quantified, and expressed in quantitative terms. An ordinalist thinks that you cannot measure utility in quantitative terms.
Cardinal: people can enumerate their utility differences from different baskets of goods or services. I.e.) they can put a number to how much they like something. Ordinal: people can provide rankings of different baskets of goods or services. I.e.) they can say which combinations of goods they like better than others, but not by how much. Additionally, we basically assume transitivity, continuity, rationality, and convexity of preferences.
Indifference curve: ordinal-based preference structure, based on WARP (weak axiom of revealed preferences). Marshellian: cardinal-based preference structure.