PrepareTheory of Consumer Behaviour · 1 min read
Meaning of Utility
Theory of Consumer Behaviour
Meaning of Utility
Utility is just a way to say the enjoyment or help you get from something you use.
Utility is the amount of satisfaction a consumer derives from the consumption of a commodity at a particular time.
If you are hungry and you eat a plate of Jollof rice, the happiness you feel is what we call utility.
Do not confuse utility with externality, which is how you feel when someone else is the one using something. Keep these points in mind:
When a person derives satisfaction from a commodity directly consumed by him it is called utility.
When a person derives dissatisfaction from a commodity directly consumed by him it is called dis-utility.
When a person derives satisfaction from a commodity indirectly consumed by him it is called Positive externality.
When a person derives dissatisfaction from a commodity indirectly consumed by him it is called a negative externality.
Key points
- •Utility refers to the satisfaction a consumer obtains from consuming a commodity at a particular time.
- •When a consumer experiences dissatisfaction from a commodity they directly consume, it is termed dis-utility.
- •Positive externality occurs when a person derives satisfaction from a commodity consumed indirectly.
- •Negative externality describes dissatisfaction derived from a commodity indirectly consumed by a person.