Explain the difference between Cardinal and Ordinal Utility. Give exam

Explain the difference between Cardinal and Ordinal Utility. Give example.

Answer»

Difference between Cardinal Utility and Ordinal Utility:

Basis	Cardinal Utility	Ordinal Utility
Meaning	It means satisfaction that can be measured in numbers such as 1,2,3 etc.	It refers to the satisfaction that cannot be measured in numbers.
Concept	This concept was given by Marshall.	This concept was given by j.R. Hicks.
Realistic	It is less realistic.	It is more realistic.
Analysis	This theory is explained by the Marginal utility.	This theory is explained through indifference curve.
Measurement of Satisfaction	Cardinal utility measures satisfaction in terms of units.	Ordinal utility measures satisfaction in terms of ranks.
Example	Cup of tea offers you 4 units of utility.	Cup of tea offers you greater satisfaction than a cup of coffee.