Utility and its types

Utility is the amount of satisfaction that you will get from the consumption of a product or service.

There are two types of utility are there:

A)Ordinal Utility: It is the need of the consumers preference for one commodity over another or for one basket of goods over another.

Assumption:

1) Rationality-
Assume that the customer is rational who is at maximum is level of satisfaction for given income and prices of goods and services which is used to consume.

2)Ordinal utility-the consumer that only Tennis order papers for the given goods and services.

3)Transitivity and consistency of  choice-The consumer’s choice is expected to be either transitive or consistent. The transitivity of choice means, if the consumer prefers commodity X to Y and Y to Z, then he must prefer commodity X to Z.The consistency of choice means that if a consumer prefers commodity X to Y at one point of time, he will not prefer commodity Y to X in another period or even will not consider them as equal

4)Nonsatiety-customer has not reach the saturation point of any commodity and and later he prefers all the commodities in large quantities.

5) Diminishing marginal rate of substitution-The marginal rate of substitution refers to the rate at which the consumer is ready to substitute one commodity (A) for another commodity (B) in such a way that his total satisfaction remains unchanged.

B)Cardinal Utility-Cardinal utility is nothing but a feeling of satisfaction pleasure happiness which a consumer derives from the consumption of a commodity. Another word is is the one satisfying power of a commodity.

Assumption-

1) utility of a commodity reminding a consumer is willing to pay for it

2) marginal utility of money remains constant.