How many methods of utility analysis are there?

1.	How many methods of utility analysis are there?
Answer» There are two methods of utility analysis. These are: (i) Cardinal Analysis : Cardinal or marginal utility analysis is an important theory of consumer’s behaviour which provides an explanation of consumer’s demand for a product and derives the law of demand which establishes an inverse relationship between price and quantity demanded for a product. (ii) Ordinal Analysis : It is a powerful analytical tool of consumer analysis. Ordinal utility is not a quantity or a numerical value. It is only an expression of the consumer’s preference for one commodity over another or for one basket of goods over another.

Answer»

There are two methods of utility analysis.

These are:
(i) Cardinal Analysis : Cardinal or marginal utility analysis is an important theory of consumer’s behaviour which provides an explanation of consumer’s demand for a product and derives the law of demand which establishes an inverse relationship between price and quantity demanded for a product.

(ii) Ordinal Analysis : It is a powerful analytical tool of consumer analysis. Ordinal utility is not a quantity or a numerical value. It is only an expression of the consumer’s preference for one commodity over another or for one basket of goods over another.

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