Ordinal and Cardinal utility

Ordinal Utility

As per the concept of ordinal utility, utility cannot be measured   in terms of exact quantity. But a customer can rank his preference in subjective terms by comparing the utility he derives from consumption of different commodities.

Assumptions are:

1)      Customer is rational and aims at maximization of utility from goods and service for his given income.

2)      Customer has not reached his saturation level after consumption different level of goods and services.

Cardinal utility

As per the concept of cardinal utility, utility can be measured   in quantities   such   as 1, 2, 3 and so on. This concept helps us to analysis consumer behaviour.  

Assumptions are:

1)      Customer has limited resources therefore his purchase decision depends upon the highest amount of utility he receives from consumption of different goods and services.

2)      Diminishing Marginal utility means decrease in level of utility a person receive from consumption of additional unit of any good or service.