Question

What is the difference between cardinal and ordinal measurement of utility?

Differentiate between cardinal utility and ordinal utility.

Answer 1

Sr. No.	Cardinal utility	Ordinal utility
1.	Cardinal utility means that the utility that a consumer gets from a unit of a commodity can be measured in absolute amounts.	The term ordinal means ranking or ordering, like first, second and third. The ordinal utility implies that the consumer is capable of simply comparing the utility derived from different goods or different units of the same good.
2.	Utility derived from a commodity can be measured just as we can measure height, weight, length, temperature, etc.	In other words, ordinal utility does not require that the consumer should be in a position to measure (in quantitative terms) the utility derived from different goods or different units of the same good or different combinations of goods.
3.	The marginal utility approach explained above assumes that utility is measurable in absolute terms.	All that is necessary for the consumer to know is which goods or which combinations of goods give him the same utility and which goods or combinations of goods give more or less utility – how much more or less is not required.
4.	In other words, utility can be expressed in cardinal numbers such as 1, 2, 3, 4, etc.	Thus, the ordinal utility concept is relatively less restrictive than the cardinal utility concept.
5.	Indifference curve analysis, on the other hand, is based on the idea of ordinal utility.	While the cardinal utility concept implies that the consumer is able to measure utility, the ordinal utility concept merely requires that the consumer is capable of arranging goods in order of preference.