Superiority of Indifference Curve Analysis Over Marginal Utility Analysis

1) Measurement of Utility :
The indifference approach is superior to the cardinal utility analysis (Marginal Utility) because it measures utility ordinally.
A consumer can compare the satisfaction (utility) derived from different goods or from different units of the same good.The ordinal method make this technique more realistic.

2) Study combination of two goods:
The cardinal utility approaches a single commodity analysis in which the utility of one commodity is regarded independent of the other.It does not speak of substitute or complementary goods, but group them as one commodity.

This assumption is less realistic as consumer buys not one but combination of goods at time.

The indifference curve technique is a two commodity model which discusses consumer behavior in case of substitutes, complementaries and related goods.

3) Marginal Utility of Money is not constant :

The utility analysis assumes constant marginal utility of money because it takes consumer income to be constant, but this is not realistic condition as with rise or fall in income the Marginal utility of money changes.

On the other hand Indifference curve technique analyses the income effect when the income of the consumer changes.

With a rise or fall in income the marginal utility of money changes. But in marginal utility analysis it is constant, an individual spends only a part of his whole expenditure on any one thing at a time.

It can be possible in one commodity but not of various goods. Indifference curve analyze the other commodities.

Indifference curve analyse income effect when income of consumer changes.

4) Explain the dual effect of price effect :

Marginal Utility analysis explain the effect of change in the price of a commodity on its demand only through the substitution effect (with the assumption that price of related goods are given).

It ignores income effect of a price change by assuming constant marginal utility of money.

The indifference curve divides the price effect into income effect and  and substitution effect.