Explain the concept of utility
Explain the concept of utility
Explain the concept of utility
In the ordinary sense utility implies usefulness of a particular commodity. However, from the economic point of view utility is not the same as usefulness.
It is, in fact, the power or capacity of a product or service to satisfy a human want.
Thus, the utility of a commodity or service lies in its capacity to satisfy human wants though it may not be useful to the consumer.
The following features of utility help to understand the concept better :
1) UTILITY IS INTROSPECTIVE :
Utility is introspective or subjective. It is a psychological concept as it relates to the consumer's mental attitude and the consumer's satisfaction with a particular commodity or service. This indicates that in absence of a consumer, there is no utility of any product or service.
2) Utility is relative :
Since utility differs from person to person, every individual has his own level of satisfaction from a particular product or service.
Thus, it is a relative term and may differ from person time or place. Thus, the same person may have different utility for the same commodity at a different time or place.
3) UTILITY HAS NO MORAL CONSIDERATION :
Utility has no ethical value or moral consideration because any commodity that satisfies a particular want ( whether good or bad ) has utility.
The commodity may be good, bad, noble or ignoble, utility remains neutral.
4) UTILITY CAN BE MEASURED CARDINALLY :
The utility measurement may have a cardinal or ordinal approach. the cardinal approach states that utility is quantifiable i.e a person can measure his amount of satisfaction numerically.
However such a measurement is imaginary.
5) UTILITY DEPENDS ON THE INTENSITY OF WANTS :
Utility depends on the intensity of the want that's not yet satisfied. The greater the intensity of the unsatisfied want, the higher will be its utility.
6) UTILITY IS DIFFERENT FROM SATISFACTION :
Utility only depends upon the satisfaction power of a commodity and is not the same as satisfaction.
While utility is the anticipated satisfaction derived from a particular commodity, satisfaction is the actual experience utility may he equal, more or less than the actual satisfaction derived.
7) UTILITY INDEPENDENCE :
The utility of a particular commodity lies in its capacity to satisfy the given want. It is totally independent and is not at all connected to the quantity of other commodities consumed.
Gain a Great Deal with Standard Replacement of FXRC Water Filter Who Wrote the Proverbs? How Does Duty Free Work? The Significance of Posture Correction for a Better Life Burberry Outlet Is Actually Surprisingly Long Promoting Burberry Outlet World-wide Four Things You Should Never Do When Cleaning a Stainless Steel Sink Building Vocabulary: Using Context Clues SETI Versus The Trickster Gods Armor-bearing - Developing Effectiveness With the Spirit of Armor-bearing Kingdom Buildersgc: Feedback Plays The Best Role Tata indigo manza Test Drive Chiesa di San Giovanni Maggiore - Naples