Cardinal utility financial definition of cardinal utility
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cardinal utility the (subjective) UTILITY or satisfaction that a consumer derives from consuming a product, measured on an absolute scale. This implies that the exact amount of utility derived from consuming a product can be measured, and early economists suggested that utility could be measured in discrete units referred to as UTILS. However, because it proved impossible to construct an accurate measure of cardinal utility, ORDINAL UTILITY measures replaced the idea of cardinal utility in the theory of CONSUMER EQUILIBRIUM.
See DIMINISHING MARGINAL UTILITY.