ORDINAL UTILITY

• The ordinal utility approach is based on the fact that the

utility of a commodity cannot be measured in absolute
quantity, but however, it will be possible for a consumer to tell
subjectively whether the commodity derives more or less
equal satisfaction when compared to another.
• The modern economist, Hicks, in particular, have applied the
ordinal utility concept to study the consumer behavior. He
introduced a tool of analysis called “Indifference Curve” to
analyze the consumer behavior.
•  The Indifference Curve shows the different
combinations of two goods that give equal
satisfaction and utility to the consumers. In
other words, the indifference curve is the
graphical representation of different
combinations of goods (generally two), for
which the consumers are indifferent, in terms
of the overall satisfaction and the utility.