Utility analysis or cardinal approach, Managerial Economics

Utility Analysis or Cardinal Approach:

The Cardinal Approach to the theory of consumer behavior is based upon the concept of utility. It assumes that utility is capable of measurement. It can be added, subtracted, multiplied, and so on.

According to this approach, utility can be measured in cardinal numbers, like 1,2,3,4 etc. Fisher has used the term 'Util' as a measure of utility. Thus in terms of cardinal approach it can be said that one gets from a cup of tea 5 utils, from a cup of coffee 10 utils, and from a rasgulla 15 utils worth of utility.

Posted Date: 4/1/2013 2:47:02 AM | Location : United States







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