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Compare and contrast ordinal and cardinal utility theory

Compare and contrast ordinal and cardinal utility theory.

Answers

Benjamin
Similarities
-Cardinal utility states that the satisfaction derived from comsumption of certain good can be measured in utils while ordinal states that satisfaction cannot be measured
-Cardinal utility is a quantitative measure while ordinal utility is a qualitative measure
-In cardinal utility,it is assumed that consumers derive satisfaction through consumption of one good at a time while in ordinal a consumer may derive satisfaction from the consumption of a combination of goods and services

Comparison
-Both assume a consumer is rational-he is well aware of his income and the prices of the goods prevailing in the market and wants to maximize satisfactiom
-Both approaches represent the common human behaviour based upon psychology and they lack any type of statistical data
Kalis answered the question on March 21, 2018 at 06:52

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