Cardinal Utility vs. Ordinal Utility

Cardinal utility measures how much satisfaction or happiness a person gets from consuming goods, assigning specific numerical values to quantify preferences—for example, "I get 10 units of happiness from one apple." Ordinal utility, on the other hand, simply ranks preferences without assigning exact numbers, such as "I prefer apples over oranges, but I don't say how much more." Essentially, cardinal utility focuses on the magnitude of satisfaction, while ordinal utility only indicates the order of preferences. Both are useful in understanding consumer choices, with ordinal utility being more practical because it reflects real-world decision-making without requiring precise measurements.