The power of satisfying the wants of the consumer is called utility. It is also means satisfying the human want according to their taste and preferences.People allocate their income to maximize their satisfaction of total utility.
We can measure utility in utils. There are two different ways of measuring utility-
Cardinal utility: Cardinal utility is a utility that the customer measures their satisfaction in terms of quantitative number such as 1,2,3 etc
Ordinal utility: ordinal utility is a utility that the customer satisfy themselves by consumption of product or services but it cannot be measured numerically .
Characteristics of utility
It depends on want of consumer.
It is related with consumable goods.
It differs from satisfaction.
It is measurable.
It can be both positive as well as negative.
Kinds of utility:
Marginal utility- Marginal utility is the additional utility derived from consuming of one more unit of good or services.
Average utility- Average utility is a utility in which the total consumption of good is divided by number of total units.
Total utility- Total utility is the total satisfaction received through the consumption of given total quantity of goods.
We can measure utility in utils. There are two different ways of measuring utility-
Cardinal utility: Cardinal utility is a utility that the customer measures their satisfaction in terms of quantitative number such as 1,2,3 etc
Ordinal utility: ordinal utility is a utility that the customer satisfy themselves by consumption of product or services but it cannot be measured numerically .
Characteristics of utility
It depends on want of consumer.
It is related with consumable goods.
It differs from satisfaction.
It is measurable.
It can be both positive as well as negative.
Kinds of utility:
Marginal utility- Marginal utility is the additional utility derived from consuming of one more unit of good or services.
Average utility- Average utility is a utility in which the total consumption of good is divided by number of total units.
Total utility- Total utility is the total satisfaction received through the consumption of given total quantity of goods.
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