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 a commodity which satisfies the human want; directly or indirectly is called Utility. Those commodities, which have wants satisfying power are called ‘Useful Commodities‘.
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 realized by consuming that commodity. Estimated satisfaction for a certain commodity depends upon the intensity of desire of a particular person or depends on desirableness.
Characteristics of Utility
- It is a psychological concept, which can only be felt. It cannot be seen.
- It depends on the intensity of wants.
- It differs from usefulness. Such as, Cigarette has satisfaction for cigarette smokers, but it is injurious (not useful) to health.
- Its concept is indifferent from a moral point of view. Such as – Wine, in spite of being useful for a wine drinker; it is not considered good from a moral point of view.
- It is related to Consumable Goods only.
- It is different from satisfaction
- It does not depend on Actual consumption. It is an assumption.
- It is measurable.
- 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.