Difference between cardinal and ordinal approaches
What Are The Similarities In Cardinal And Ordinal Approaches?
what are the similarities between cardinal utility analysis and the ordinal utility analysis?
Both the classical and neo-classical approaches assume that a consumer is rational. He is well aware of with his income and the prices of the goods prevailing in the market and in such state of affairs the consumer wants to maximize his satisfaction.
The Marshallian cardinal theory is based upon the reality of diminishing marginal utility. On the same line Hickans cardinal theory also rests upon the diminishing marginal rate of substitution which is in reality he product of diminishing marginal utility.Both the approaches represent the common human behavior and they are based upon human psychology and they lack any type of statistical data.
With slight difference the modern economist's have concluded that both the approached yield the same results.Thus we find that two approaches give the same results. Therefore these approaches follow the proportionality rule or law of substitute in consumption while describing the consumer's optimality.
So we can say that they are the substitute to each other if one of the approach fails or not available the other will be there as a substitute to replace it. Or may be they both can run in proportion to each other, because they both are describing the consumer optimality.
The Marshallian cardinal theory is based upon the reality of diminishing marginal utility. On the same line Hickans cardinal theory also rests upon the diminishing marginal rate of substitution which is in reality he product of diminishing marginal utility.Both the approaches represent the common human behavior and they are based upon human psychology and they lack any type of statistical data.
With slight difference the modern economist's have concluded that both the approached yield the same results.Thus we find that two approaches give the same results. Therefore these approaches follow the proportionality rule or law of substitute in consumption while describing the consumer's optimality.
So we can say that they are the substitute to each other if one of the approach fails or not available the other will be there as a substitute to replace it. Or may be they both can run in proportion to each other, because they both are describing the consumer optimality.