Utility – Concept and Characteristics of Utility

Meaning of Utility


Utility means the power that satisfies any want. It is such an internal quality; which is found in all commodities desired by a person. The quality (power or capability) of commodity which satisfies the human want; directly or indirectly is called Utility. Those commodities, which have wants satisfying power are called ‘Useful Commodities‘.

Concept of Utility

Wants satisfying power’ has two meanings

  • Capacity to gain satisfaction
  • Actual Realised satisfaction

Estimated (Assumed) Satisfaction of a particular commodity can be equal to, less or more than, the satisfaction, actually realised by consuming that commodity. Estimated satisfaction for a certain commodity depends up on the intensity of desire of a particular person or depends on desirableness.

Characteristics of Utility

  1. It is a psychological concept, which can only be felt. It cannot be seen.
  2. It depends on the intensity of wants.
  3. It differs from usefulness. Such as, Cigarette has satisfaction for cigarette smoker, but it is injurious (not useful) to health.
  4. Its concept is indifferent from moral point of view.  Such as – Wine, in spite of being useful for a wine drinker; it is not considered good for moral point of view.
  5. It is related with Consumable Goods only.
  6. It is different from satisfaction
  7. It does not depend on Actual consumption. It is assumption.
  8. It is measurable.
  9. It can be both positive as well as negative. Up to the point of maximum satisfaction, it is positive and after that negative utility is derived.


  1. Marginal
  2. Total