THE UTILITY OF USING SOMETHING

  THE CONCEPT OF UTILITY: CARDINAL AND ORDINAL

       First of all let us understand what is utility ? 

• Utility is the satisfaction that people derive from the consumption activities. 
• If a commodity is expected to fulfill the need of the customer, the commodity is said to have utility. For example: A person buying multivitamins is expecting that the multivitamins will help him in maintaining good health. This means the multivitamins have utility.

CARDINAL UTILITY: Cardinal utility is a quantitative concept      and can be measured in terms of number. For example: If Audi a      car gives 4000 units of utility, a Lamborghini car would give            7000 units. It is important for economics which tries to put value      on consumption.

ORDINAL UTILITY: The customers only ranks choices in              terms of preference but we do not give exact numerical                    figures for utility. For example: We prefer Lamborghini car to a        Audi car, but we don't say by how much.