Cardinal utility theory states that the utility (satisfaction) gained from a particular good or service can be measured in the same way as distance, temperature and time can. The theoretical unit of measurement is the ‘util’. If utility can be measured in this way it should be possible to say that an individual will get 100 utils from good A and 150 utils from good B, for example. While this concept can be useful in theory, most people believe that it cannot be used in a practical way and that only ordinal utility theory can be used. A good in economics is any physical object (natural or man-made) or service that, upon consumption, increases utility, and therefore can be sold at a price in a market. ...
There are economists who believe that utility can be measured. These measures are not perfect but can act as a proxy for the utility. Lancaster’s characteristics approach to consumer demand illustrates this point.
The doctrine of utilitarianism saw the maximization of utility as a moral criterion for the organisation of society.
Utility is applied by economists in such constructs as the indifference curve, which plots the combination of commodities that an individual or a society requires to maintain a given level of satisfaction.
When speaking of cardinalutility, it could be concluded that the cup of coffee is exactly the same amount better as a cup of tea as the cup of tea is better than the cup of water.
Cardinal and ordinal utilityUtility was originally viewed as a measurable quantity, so that it would be possible to measure the utility of each individual in society, and add this together to give the total utility of all people in society.
A utility of 100 units towards a cup of coke is twice as desirable as a cup of coffee with a utility level of 50 units.
A utility of 100 towards an ice-cream is not twice as desirable as a utility of 50 towards candy.
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