Question

1) Analyze the cardinal utility theory Vs Ordinal utility theory.

Answer 1

Cardinal utility theory is given by the neo classical economist, according to this theory customer can express satisfaction in numerical number or which can be measurable.

In the cardinal utility theory it is assumed that one util is equal to the one unit of money.The measurements of the utility is not possible so it is less realistic.As the consumers satisfaction is depends upon many factors like preference over product,mood of the customer,taste so this can not be measurable.

In the Ordinal utility theory,it state that it is not possible for the consumers to express the satisfaction in absolute or numerical terms.

According to this theory the utility is measured by the qualitatively so it is more realistic and it is based on the ranking of the preference.