Question

Explain any four features of utility.

Elaborate on any four features of utility.

Answer 1

The following are the features of utility:

1) Relative concept: Utility is related to time and place. It varies from time to time and from place to place. For example, (i) woolen clothes have a greater utility in the winter. (ii) Sand has greater utility at the construction site than at the seashore.

2) Subjective concept: It is a psychological concept. Utility differs from person to person. This is due to differences in taste, preferences, likes, dislikes, nature, habits, profession, etc. For example, a stethoscope has utility to a doctor but not to a layman.

3) Ethically neutral concept: The concept of utility has no ethical consideration. It is a morally colourless concept. The commodity should satisfy any want of a person without consideration of what is good or bad, desirable or undesirable. For example, a knife has the utility to cut fruits and vegetables as well as it can be used to harm someone. Both wants are of different natures but are satisfied by the same commodity. Thus, utility is ethically neutral.

4) Utility differs from usefulness: Utility is the capacity of a commodity to satisfy human wants, whereas usefulness indicates the value in the use of the commodity. For example, milk has both utilities as well as usefulness to a consumer, while liquor has utility only to an addict, but has no usefulness.

5) Utility differs from pleasure: A commodity may possess utility but it may not give any pleasure to the consumer. For example, an injection for a patient has utility because it cures the ailment but it hardly gives any enjoyment or pleasure to him.

6) Utility differs from satisfaction: Utility is a cause of consumption, and satisfaction is the end result of consumption. They are interrelated but still different concepts. For example, a thirsty person drinks a glass of water since water has the capacity to satisfy thirst. The utility of water is the cause of consumption and the satisfaction derived is the end result of consumption.

7) Measurement of utility is hypothetical: Utility is an abstract concept. Cardinal or numerical measurement of utility is not possible. For example, a thirsty person after drinking water may derive a higher or lower level of utility. Thus, the utility can only be experienced and found as either positive, zero, or negative. The negative utility is called disutility.

8) Utility is multi-purpose: A commodity can satisfy the wants of more than one person; it can also be put to several uses. For example, electricity can be used to serve many purposes and for many people at some point in time.

9) Utility depends on the intensity of want: Utility depends on the intensity of a want. The more intense the want, the greater will be the utility. As and when the urgency of wanting declines, utility diminishes. For example, a hungry person finds more utility in food than a person who is not hungry.

10) Utility is the basis of demand: A person will demand a commodity only if it gives utility to him. For example, a sick person has utility in medicines; hence, he demands medicines.