Definition of cardinal approach and ordinal approach

Definition of Cardinal Approach/Utility

The notion of cardinal approach was formulated Neo-Classical Economist Alfred Marshal and his followers who hold that utility is measurable and can be expressed quantitatively or cardinally, i,e. 1,2,3,4,...

Definition of Cardinal Approach/Utility

Ordinal utility is propounded by the modern Economists Hicks and Allen, which states that it is not possible for consumers to express the satisfaction derived from a commodity in absolute or numerical terms. Modern economists hold that utility being a psychological phenomenon and it cannot be measured quantitatively , theoretically and conceptually.

Difference between Cardinal Approach and Ordinal Approach

Cardinal Approach

1. Cardinal Approach says that utility can be measured.
2. It is formulated by Alfred Marshall.
3. There are two theories in Cardinal Approach.

• Consumer equilibrium in case of one commodity.
• Consumer equilibrium in case of two commodities.

4. Law of diminishing marginal utility works on the base of Cardinal Approach.
5. Equi-Marginal utility is also defined by Cardinal Approach.
6. In case of Single or double commodity.

Ordinal Approach

1. Ordinal Approach says utility cannot be measured but it be ranked.

2. It is represented by Allen and Hicks.

3. There are also two theories in Ordinal Approach.

• Indifference Curve.
• Budge Line

4. We read consumer equilibrium using Indifference Curve and Budge Line Theories.

5. Only in case of double commodities.