Answer to Question #167736 in Microeconomics for Abel Antwi

Question

The cardinal qualification of utility is not necessary to determine how a consumer should balance his consumption of commodity x and y. Provide a simple proof

Answer 1

Cardinal utility is the assigning of different commodities a certain numerical value called utils that show the level of preference by a consumer for different goods. For example, a consumer may place cardinal utilities of 4000 utils and 6000 utils for a Nissan Lafesta and Nissan X-trail respectively. This shows that the consumer prefers the latter to the former in terms of utility.

Whereas the numeral values show the preference level, they are mainly derived from prices of the commodities. Like in our case, the two vehicles may be valued at 4000 dollars and 6000 dollars respectively. This may therefore not be real order of preference for the consumer. 

The consumer may be more satisfied with some features in the commodity with less utility and not well served by others in the second commodity. Therefore, cardinal quantification may not serve so well as an indicator of consumer's preference.