Answer the following Questions. [Any Three]
Explain features of utility.
Meaning: -In ordinary sense, the term utility means ‘usefulness’. In economics, utility refers to the “Want satisfying power of a commodity”. For example: - Water has utility because it can satisfy the thirst of a person.
Definition: -‘Utility is the quality in commodities that makes individuals want to buy them, and the fact that individual want to buy commodity shows that they have utility”
Defined by............. (Mrs. Joan Robinson)
Following Are the features of utility
- Subjective or Psychological concept: - Utility is a psychological concept. It differs from person to person. The utility of a good cannot be same for all individuals. For example (1) Cigarette has much utility to a smoker, rather than that of a Non – smoker. (2) Walking stick has much utility to an old man, rather than that of a young man.
- Relative concept: - Utility of a commodity changes from time to time and place to place. For example (1) Woollen clothes has more utility in Kashmir, than in Mumbai. (2) Umbrella has more utility in rainy season, than in summer.
- Different from Usefulness: - Utility indicates the power of goods to satisfy human wants; irrespective whether the goods is useful or harmful. Certain goods have utility but they are not useful. For e.g.: -narcotics or drugs like cocaine may have utility for some people who use them to get rid of tension, and strees. But in general, such products are harmful, as it affects the health and wealth of a person.
- Different from satisfaction: - Utility is not same as that of satisfaction. Utility is not same as the satisfaction. Utility is the power of commodity which a consumer expects before consuming a commodity. But satisfaction is something which he realise after consuming it.
- Different from pleasure: - A commodity may have utility but need not give pleasure. For ex: Bitter medicine does not give pleasure. Yet it cures the disease.
- Cannot be measured cardinally: - Utility, being a subjective concept, cannot be measured numerically. But it can only be measured ordinally, i.e. in the order of preference.
- Utility is intangible: - Utility is intangible in nature. It has no physical existence. One cannot touch it or see it. It can be felt only by the use if the commodity.
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- Features of Utility