We've previously discussed utility in terms of measurable units, like counting happiness points. That's the cardinal approach. But can you really say an apple gives you '10 utils' of satisfaction and a banana gives you '8 utils'? It's a bit abstract.

The ordinal approach is more intuitive. It doesn't ask how much more you like an apple than a banana. It just asks if you prefer one over the other, or if you're indifferent between them. This method relies on ranking your preferences, not quantifying them. The main tool for this is the indifference curve.

An indifference curve is a graph showing different combinations of two goods that give a consumer the same level of satisfaction. Imagine you're equally happy with 1 pizza and 12 sodas as you are with 2 pizzas and 6 sodas. Both bundles lie on the same indifference curve. Any point on the curve represents a mix of goods that leaves you feeling equally well-off.