What Is The Difference Between The Cardinal Approach And Ordinal Approach?


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nina rocks Profile
nina rocks answered
Hi.. I would try to help you out but you should consult more expert people..             Cardinal and ordinal approaches both are related to the UTILITY of a commodity. As you know utility is the want satisfying capacity or ability of a commodity.. Now acc. To the cardinal approach utilities of 2 commodities can be measured as well as compared ( in terms of number of units of a commodity purchased).. On the other hand the ordinal approach says it is not possible   to measure utility of a commodity. If we think logically utility is totally a subjective experience.   Some commodity which might have utility for you might not have for me or may be the degree or extent of utility might be different for 2 people.Thus logically it is not possible to measure utility in exact terms. Therefore the ordinal approach is considered to be better than the cardinal approach as it is more realistic and practical.                                                                                        Do consult your teachers.
nina rocks Profile
nina rocks answered
Cardinal and ordinal approaches are related to theory of consumer behaviour. It is related to the utility of a commodity.. UTILITY of a commodity means want satisfying power of a commodity.. NOW acc. To the cardinal approach utility can be measured in absolute terms i.e; in terms of units of the commodity.. On the other hand ordinal approach says that utility cannot be measured as it is a subjective experience and varies from person to person.
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ASWIN DEUJA answered
• It can not explain the impact of changes in the income on demand. Activity: - Analyse and list some more limitations of this approach. Ordinal Utility Approach In order to overcome the limitations of the cardinal utility approach Hick gave a new treatment to the theory of demand. According to this approach instead of measuring the utility in terms of the
number, given a choice from the “basket of commodities” a consumer can rank
the commodities according to their preferences. The higher order of preference is
given to the commodity which will give a higher utility. Thus this theory is also
know as the ‘revealed preference theory’.
This approach is explained with the help of “indifference curve analyis”

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