There are two methods of utility analysis.
These are:
(i) Cardinal Analysis : Cardinal or marginal utility analysis is an important theory of consumer’s behaviour which provides an explanation of consumer’s demand for a product and derives the law of demand which establishes an inverse relationship between price and quantity demanded for a product.
(ii) Ordinal Analysis : It is a powerful analytical tool of consumer analysis. Ordinal utility is not a quantity or a numerical value. It is only an expression of the consumer’s preference for one commodity over another or for one basket of goods over another.
