UTILITY

UTILITY

Utility is a term explained by Economist that refers to the usefulness of a product which consumer receives by using of goods and services. Utility is basically the satisfaction or capacity of commodity to provide satisfaction. Utility is the basic needs of consumer. Consumer try to find utility in each and every things. For instance: If I want to buy new clothes, I will look for the clothes until I get the one that give me utility. The more Utility I'll receive more will be the demand of the product and services.

In Economics, we consider consumer as rational. So rational consumer are the one who can relate utility to real life, understand its applicability and can experience it also. This is because everyday consumer get satisfied by using one or other commodity. But rational consumer is the one who identifies it , achieve maximum benefits and also know the consequences of it. This is because more usage of product and services can also lead to negative results. That's why we should analysis it carefully. So, if the consumer is rational can easily get this concept. Utility is very wide term. It includes Total utility, Marginal Utility, Average Utility and so on.

Total Utility is the total satisfaction received by the consuming total quantity of goods and services.

Marginal Utility is the additional utility received by the gaining another quantity of goods and services.

Average Utility is that utility in which total unit of consumption of goods  is divided by number of units.

Utility get maximized when consumer make full use of resources within the given budget and can get enough satisfaction.

As per textbook, Utility can be measured in cardinal( Numeric) term and ordinal term and it is measured in util.