The number of bits used to represent a sampled, analog signal is known as the resolution of the converter. This number is also related to the total number of unique digital values that can be used to represent a signal.

For example, if a given ADC has a resolution of 10 bits, then it can represent 4,096 discrete values, since 2^10 = 4,096.

We may also think about resolution from an electrical standpoint, which is expressed in volts. In that case, the resolution the ADC is equal to the entire range of possible voltage measurements divided by the number of quantization levels. Voltage levels that fall outside the ADC’s possible measurement range will saturate the ADC. They will be sampled at the highest or lowest possible level the ADC can represent.

For example:

- Full scale measurement range: -5 to 5 volts
- ADC resolution 10 bits: 2^10 = 1,024 quantization levels
- ADC voltage resolution: (5-(-5))/1024 = 0.0098 volts = 9.8 mV

Large ranges of voltages will fall into in a single quantization level, so it is beneficial to increase the resolution of the ADC in order to make the levels smaller. The accuracy of an ADC is strongly correlated with its resolution however; it is ultimately determined by the Signal to Noise Ratio (SNR) of the signal. If the noise is much greater relative to the strength in the signal, then it doesn't really matter how good or bad the ADC is. In general, adding 1 more bit of resolution is equal to a 6 dB gain in SNR.

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