Subject:M.E

Topic:UTILITY

Q.What do you mean by utility?

ANS:

       Utility is an important concept in economics and game theory, because it represents satisfaction experienced by the consumer of a good. Not coincidentally, a good is something that satisfies human wants and provides utility, for example, to a consumer making a purchase.

Q.What is meant by utility?

ANS:

      .Utility is defined as something that is useful to someone or to the general public. An example of utility is the gas and electric company. utility. something useful to the public, esp. the service of electric power, gas, water, telephone, etc.

Q.What is the purpose of utility theory?

ANS:

       Marginal Utility Theory. Marginal Utility theory examines the increase in satisfaction consumers gain from consuming an extra unit of a good.Utility is an idea that people get a certain level of satisfaction / happiness / utility from consuming goods and service.

Q.What is the purpose of a utility analysis?

ANS:

        Utility analysis refers to the process that describes, predicts and/or explains what determines the usefulness or desirability of decision options, and examines how that information affects decisions.

DIFFERENT ASPECTS OF UTILITY

1. Initial Utility System

"Initial utility system" means a complete operating utility system, including energy efficiency measures and installations within the distractor proposed district, capable of supplying the consumers required to be served by the district at the time of acquisition or construction with all of their existing water or electrical energy needs.

2). What is 'Marginal Utility'

Marginal utility is the additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important economic concept because economists use it to determine how much of an item a consumer will buy. Positive marginal utility is when the consumption of an additional item increases the total utility. Negative marginal utility is when the consumption of an additional item decreases the total utility.

3). POSITIVE UTILITY:The amount of utility that gives positive satisfication, e.g. when you consume five apples with their total utility being 2 units,this is positive utility.

4)SATIETY:In economics, the point of satiety is defined as the point when the marginal utility of any activity is zero. From this point on, the marginalutility actually turns negative.

5) NEGATIVE UTILITY: Exists when a phenomenon or action causes more harm than good. Whereas positive utility implies beneficence or increased hedonic pleasure, negative utility implies maleficence or decreased satisfaction. A good example of negative utility is the alcoholic who takes a drink. The drink may provide him with massive positive subjective utility but with net negative utility, because the alcohol is destroying his liver (as well as his kidneys and brain). 
Another example of negative utility is the negative attention utility to which almost everyone is subjected when they are exposed to advertisements. 

6). Total Utility:The aggregate level of satisfaction or fulfillment that a consumer receives through the consumption of a specific good or service. Each individual unit of a good or service has its own marginal utility, and the total utility is simply the sum of all the marginal utilities of the individual units. Classical economic theory suggests that all consumers want to get the highest possible level of total utility for the money they spend.