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Utility: Meaning and Different Aspects of Utility


When we consume a product, we in fact use its utility. Therefore, we are now analyzing the concept of utility.

Utility is the power of a product by which a human want is satisfied. For example, bread satisfies hunger, cloth satisfies the want for clothes and T.V. satisfies the want for entertainment. The more we want a product the more utility we get from it and if we don’t use a product, we don’t get utility from it. Hindus don’t eat beef so there is no utility for them in it. Muslims don’t eat pork. So, they don’t find utility in it. Europeans take both pork and beef. 80 they get utility from these products.

A consumer is always interested in the maximization of utility because he has limited resources to spend on consumer goods. Before we explain the law to maximize total utility, let us first explain different aspects of utility.

Following are different aspects of utility.

Initial Utility:

Initial utility is the utility which a person acquires from the use of first unit of a commodity.

Marginal Utility (MU)

Marginal utility can be defined as the change in the total utility resulting from one-unit change in the consumption of the commodity per unit of time. Or It is the addition made to the total utility by consuming one more unit, next unit or the last unit of a commodity OR marginal utility is the rate of change of total utility. Or Separate utility of every unit is also called marginal utility.

According to Prof. K.E. Boulding,

“The marginal utility of any quantity of commodity is the increase in total utility which results from a unit increase in consumption”.

According to Prof. Kirzer

“Marginal utility refers to the rate at which total utility changes as the size, stock of the commodity changes”.

We can measure marginal utility with the help of following formula

M.U. = dT.U/dQ

Where d, is rate of change (derivative a concept used in mathematics) and Q means, units consumed

OR Marginal Utility = Change in Total Utility / Change in per unit quantity consumed.

Total Utility:

Total Utility is attained from the use of specific number of a commodity is called total utility. Total utility is equal to the sum of separate utility which is attained from every unit. Or Total utility is the addition of marginal utilities or the utility derived from all the units of commodity consumed by a consumer. Or Total utility is the utility which a person acquires from consuming some units of a commodity. It is the sum of marginal utilities.

TU = MU1 + MU2 + MU3+ …. + MUN

According to Prof. D.C. Colander

“Total utility is the satisfaction one gets from one’s entire consumption of a product.”

Zero Utility:

When there is no desire to consume more units of a commodity or a want is satisfied the marginal utility is called zero. Or when there is no change in total utility by the consumption of more or additional units of a commodity.

Positive Utility:

Marginal utility greater than zero is positive i.e., until and unless there is a desire for a consumer to consume more units of a commodity utility is positive. If a unit of a commodity is yielding satisfaction to consumer it has positive utility.

Negative Utility:

Negative utility is the utility which a person acquires from the use of different units of a commodity which results into decrease in total utility. This utility is always after zero utility or less than zero.

Average Utility:

Average utility is the utility which can mathematically be found as the total utility acquired to a person from the consumption of all the units of a commodity divided by the number of units consumed.

Maximum Utility:

Maximum utility is the utility which a person acquires from the use of some units of a commodity provided that he must reaches at zero utility from the last unit consumed.

Utility function:

U= f(Q)

Utility is the function quantity of a commodity consumed.


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