Meaning of Utility

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Meaning of Utility

Published by: sadikshya

Published date: 28 Jun 2021

Meaning of Utility in Grade 12

Meaning of Utility

In an ordinary sense, the meaning of utility is used to denote usefulness but, an economic utility is a power of the commodity service to satisfy, some human wants. It is essentially a subjective concept, it relates inner sentiments and emotion. It has no physical or mental existence.

There are three types of utility. They are as follows.

  •  Total Utility (TU)
  • Marginal Utility (MU)
  • Average Utility (AV)

Total Utility (TU)

Total utility is the amount of utility derived from the consumption of all the units at the disposal of the consumer. In other words, Total utility is the total satisfaction received from consuming a given total quantity of a good or service, while the marginal utility is the satisfaction gained from consuming an additional quantity of a particular good or service.

Marginal utility (MU)

Marginal utility is defined as the change in total utility resulting in one unit change in the consumption od the commodity per unit of time. It may also be called the utility of obtained from an additional unit.

Average Utility (AU)

The average utility is the outcome of a total utility divided by a unit of the commodity consumed by a consumer at a particular unit of time. It is also known as per unit of utility.