What is cardinal utility?

Cardinal utility is a theory in economics that suggests that utility, or the satisfaction or pleasure derived from consuming a good or service, can be measured and quantified. This means that individuals can assign numerical values to the level of satisfaction they receive from consuming different goods and services. This concept is in contrast to ordinal utility, which only ranks preferences without assigning specific numerical values.

Cardinal utility is a quantitative measure of the satisfaction or pleasure a consumer derives from a specific quantity of a good or service. It assumes that consumers can assign cardinal numbers to their utility, meaning that they can determine the exact amount of additional satisfaction they receive from consuming an additional unit of a good. Cardinal utility is based on the idea that consumers can express their preferences for different bundles of goods using numerical values. These values represent the relative desirability of each bundle and allow for comparisons of the total utility derived from each bundle. The higher the cardinal utility, the more satisfaction the consumer experiences.

It is important to note that cardinal utility is a theoretical concept, and in practice, it can be challenging to accurately measure consumer utility. However, the concept of cardinal utility has been useful in economic theory and has influenced the development of economic models and theories.