Utility Analysis in Economics
UTILITY ANALYSIS What is utility: The quality of a good or service, which satisfies human wants, is called utility. The utility is the ability to satisfy human wants. Example : If a person is thirsty and he drinks water to quench his thirst, it means that water has the quality to satisfy his thirst. This quality of water is called utility. Characteristics / Features of Utility: Utility is not equated with usefulness : A good that might have the capacity to satisfy a particular want but it might not be useful for a consumer, such as alcohol provides utility for the liquor but it is harmful. Utility is a psychological concept: It means that the satisfaction obtained from the consumption of a good or service, depends on the mental aspect of the person. Utility is always individual and relative: U tility differs from person to person. A different person will get different utility or satisfaction from the same commodity. Even it varies in diffe...