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.
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.
