Utility

Utility is the capacity of commodity to satisfy human wants.

Measure of utility

It is the fact of common experience that the utility of all commodities is not the same, some commodity have greater utility than others.

Utility cannot be directly measured

Economist doesn’t posses any accurate means or apparatus for measuring utility.

Money measure of utility

Economists have, however, is devised indirect method of measuring utility. The amount of that a person is prepared to pay for a commodity rather than go without it, is a measure of its utility. Suppose you have a need of a pen for exams so badly that you are prepared to pay even 100 rupees for it, and then the utility of fountain pen is Rs.100.

10.4 Want, utility and satisfaction are different Want creates utility, Utility is a measure of satisfaction and satisfaction is the object of utility and negotiation of want.