Briefly outline the cardinal theory of consumer behaviour.?
- ADFLv 51 decade agoFavorite Answer
Cardinal Theory is a utility that applies a value to the extent of preference of one "market basket" to another as compared to Ordinal theory that just places them in the order of preference.
A is preferred over B and C
B is preferred over C
A is preferred a lot over B and a lot over C
B is preferred a little over C
This shows that the difference in preference is much greater for A then B or C, but that the difference between B and C is low. (While in Ordinal you just know that A is most preferred, B is 2nd, and C is third) This then would give you the information that it would take much more to impact consumer's behavior to get them from A to B then from B to C.
Hope this helps a bit. I'm a part-time MBA student and took a course about this about a year ago, so this is just my summary of what I remember....hope it is good enough to get you started.