How is the cardinal utility theory relevant to consumers' behaviours?

Asked on by bkaluuya

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The idea of cardinal utility is useful in explaining things like why consumers make the choices they do.  This is so even though the theory is a pretty shaky one -- there is no way to actually measure cardinal utility.  We have no way of technically determining how much utility a person derives from a particular choice.

However, the idea of cardinal utility is useful to economists because it allows them to talk about why consumers buy, for example, more of one particular kind of good than another.  It allows economists to have an explanation for consumer behavior by saying that these choices have more utility for the consumer.

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