#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
An important point to note is that the utility function is just a ranking of bundles of goods. If someone were to replace all those pieces of paper with new numbers that maintained the same ranking, then the new set of numbers would be just as useful a utility function as the first in describing our consumer’s preferences. This characteristic of utility functions is called an ordinal, as contrasted to a cardinal, ranking. Ordinal rankings are weaker measures than cardinal rankings because they do not allow the calculation and ranking of the differences between bundles.