The goods satisfy human
wants. This want satisfying quality in a good is called Utility. Utility is
that quality in a commodity by virtue of which it is capable of satisfying a
human want. Air, water (free goods) and food, cloth etc. (economic goods)
satisfies people’s wants and hence they possess utility.
In day to day life we use
this term in different way but in Economics utility is having a specific
meaning. Hence
a) Utility and usefulness are
different. For example a poison when we consume it is definitely injurious and
hence it never is useful but it satisfies the human want, i.e. the want of
person who decides to suicide and hence it possesses utility.
b) Utility is not synonymous
with pleasure. A good which possess utility may not give pleasure when.
Consumed e.g. a medicine when a patient consumes does not give pleasure since
mostly it is bitter. But it possesses utility because it is required to cure
from sickness. Thus pleasure is different and utility is different.
c) Utility is subjective means
no commodity possesses utility in itself independently of the consumer. It is a
consumer’s mind which gives it utility. A literate person may find utility in
books, new paper etc. as he is able to read those, but on the contrary an
illiterate person never find any utility. Thus utility depends on mans mind
rather than on the things itself.
d) Utility varies in different
situations. Moreover the same things may possess different utilities for
different purposes. For example water has different utilities when it is used
for drinking, bathing and washing purposes.
Types of Utility:
From Utility
Due to change in form there is change in
utility, e.g. Wood when transformed into furniture, utility will increase.
Place utility
When goods transported from
one place to another place utility can increase. For example apple will fetch
more prices in other part of country than in Kashmir and Himachal Pradesh.
Time utility
By storing a commodity and
selling it at a time of scarcity, utility can be realized more.
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