Question:
Differentiate between cardinal and ordinal measurements of utility.
Differentiate between cardinal and ordinal measurements of utility.
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Cardinal utility assigns numerical values to satisfaction, while ordinal utility only ranks preferences.
Updated On: Nov 5, 2025
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Solution and Explanation
- Cardinal Utility: Measures utility in numerical terms (e.g., utils) and assumes that the consumer can quantify satisfaction.
- Ordinal Utility: Measures utility in terms of preference ranking, where the consumer ranks goods in order of preference without assigning numerical values.
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