Which Type of Utility Can Only Be Added by the Maker of the Product?

Utility: Meaning, Types and Characteristics | Economic science

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Significant of Utility:

The want satisfying power of a commodity is called utility. It is a quality possessed by a commodity or service to satisfy homo wants. Utility can as well exist defined as value-in-use of a commodity because the satisfaction which we get from the consumption of a article is its value-in-use.

Types of Utility :

Utility may take any of the following forms:

(1) Form Utility:

When utility is created and or added by irresolute the shape or form of appurtenances, information technology is class utility. When a carpenter makes a table out of woods, he adds to the utility of forest past converting it into a more useful commodity similar furniture. He has created class utility.

(2) Place Utility:

When the piece of furniture is taken from the factory to the store for sale, it leads to identify utility. This is because information technology is transported from a identify where it has no buyers to a identify where information technology fetches a price.

(three) Time Utility:

When a farmer stores his wheat after harvesting for a few months and sells information technology when its price rises, he has created time utility and added to the value of wheat.

(4) Service Utility:

When doctors, teachers, lawyers, engineers, etc. satisfy human being wants through their services, they create service utility. It is acquired through specialised knowledge and skills.

(5) Possession Utility:

Utility is too added by changing the possession of a commodity. A book on economic theory has lilliputian utility for a layman. But if it is endemic by a student of economics, possession utility is created.

(6) Knowledge Utility:

When the utility of a commodity increases with the increment in knowledge near its employ, it is the creation of knowledge utility through propaganda, advertisement, etc.

(7) Natural Utility:

All free appurtenances such as h2o, air, sunshine, etc., possess natural utility. They accept the capacity to satisfy our wants.

Characteristics of Utility :

The following are the characteristics of utility:

1. Utility and Usefulness:

Annihilation having utility does not mean that it is also useful. If a expert possesses want satisfying ability, it has utility. Simply the consumption of that good may be 'useful' or 'harmful'. For case, the consumption of vino possesses utility for a homo habitual to drinking considering information technology satisfies his want to drink. Just the utilize of wine is harmful for health, but information technology has utility. Thus utility is not usefulness.

ii. Utility and Satisfaction:

Utility is the quality or power of a commodity to satisfy human wants, whereas satisfaction is the issue of utility. Apples lying in the shop of a fruit seller have utility for united states of america, but we get satisfaction only when we purchase and eat them. It means utility is present fifty-fifty before the actual consumption of a article and satisfaction is obtained simply after its consumption. Utility is the cause and satisfaction is the effect or result.

3. Utility and Pleasance:

It is not necessary that a commodity processing utility besides gives pleasure when we eat it. Utility is free from pain or pleasure. An injection possesses utility for a patient, because information technology can salve him of his affliction. But injection gives him no pleasure; instead it gives him some pain. Quinine is bitter in sense of taste but it has the utility to treat the patient from malaria. So, in that location is no relationship between utility and pleasance.

4. Utility is Subjective:

Utility is a subjective and psychological concept. Information technology means utility of a commodity differs from person to person. Opium is of great utility for a man accustomed to opium, but it has no utility for a homo who is not accustomed to opium. In the same mode, utility of different commodities differs from person to person. Therefore, utility is subjective.

5. Utility is Relative:

Utility is a relative concept. A commodity may possess different utility at dissimilar times or at dissimilar places or for dissimilar persons. In olden days, a Tonga had greater utility. Only now with the invention of coach, its utility has become less. A rain coat has greater utility in hilly areas during rainy flavour than in obviously areas. A fan has greater utility in summer than in wintertime.

6. Utility is Abstract:

Utility is abstract which cannot exist seen with eyes, or touched or felt with hands. For example, the argumentative ability of an advocate is abstract. Similarly, utility is abstract. Utility of a article can neither exist seen non touched or felt with hands.

Measurement of Utility :

According to Marshall, the utility of a article can be measured in terms of coin. If a consumer is willing to pay Rs.2 for an orange and Re 1 for a banana, so the utility of an orange is equal to Rs.2 and that of a banana is Re. 1 to him.

Information technology means that the utility of 1 orange is equal to 2 bananas. In other words, the utility of an orangish to the consumer is twice that of the assistant. But this assay does not hold when there are two dissimilar consumers offering two different prices for the same article.

Suppose Bhanu offers Rs.ii for a banana for which Gautam is prepared to pay Re. 1.The higher toll paid by Bhanu does not mean that he gets more than utility and Gautam less utility. Thus money does non measure the utility from a commodity. It but measures the intensity of our desire for a commodity. Despite this weakness, coin is used as a measure of utility.

Key and Ordinal Utility:

The terms 'central' and 'ordinal' have been borrowed from mathematics. The numbers i, ii, 3, 4, etc. are cardinal numbers. According to the central organisation, the utility of a commodity is measured in units and that utility tin be added, subtracted and compared. For example, if the utility of ane apple is 10 units, of banana twenty units and of orange twoscore units, the utility of banana are double that of apple and of orangish four times the apple and twice the banana.

The ordinal numbers are 1st, 2nd, 3rd, 4th, etc. which may correspond 1, 2, iv, 6 or 30, twoscore, threescore, eighty, etc. They tell us that the consumer prefers the first to the second and the third to the 2nd and first, and so on. Only they cannot tell by how much he prefers one to the other.

The entire Marshallian utility assay is based on the cardinal measurement of utility. Co-ordinate to Hicks, utility cannot be measured cardinally considering utility which a commodity possesses is subjective and psychological. He, therefore, rejects the quantitative measurement of utility and measures utility ordinally in terms of the indifference curve technique.

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Source: https://www.economicsdiscussion.net/utility/utility-meaning-types-and-characteristics-economics/18128

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