Economics

Ordinal analysis (or) Ordinal Utility Approach (or) Hicks and Allen Approach (or) Indifference Curve Analysis

Introduction: F.W.EdgeWorth (English Economist) and Vilfredo Pareto (Italian Economist)criticised the Cardinal Utility Approach.They assumed that utility cannot be measured absolutely, but can be compared or ranked or ordered by ordinal numbers such as I, II, III and so on. Edgeworth first developed a more scientific approach to the study of consumer behaviour, known as “Indifference […]

Economics

Cardinal Utility Analysis

The Law of Diminishing Marginal Utility (DMU) Introduction: H.H.Gossen, an Austrian Economist was the first to formulate this law in Economics in 1854. Therefore, Jevons called this law as “Gossen’s First Law of Consumption”.But credit goes to Marshall, because he perfected this law on the basis of Cardinal Analysis. This law is based on the […]