Utility

The concept of utility is very important in economics. In common usage, utility means usefulness. But in economics the want satisfying capacity of a particular commodity is called utility. Water has utility because one can quench his thirst with water. Pen has utility because with it one can write. Thus if a commodity or a service satisfies a human want, it is said to possess utility.

However it should he remembered that utility is not the same thing as usefulness Wine is not useful though it has utility.It satisfies the want of a person who drinks. Similarly opium, cigarettes etc. have no usefulness but they have utility. Thus the term utility as used in economics has no moral significance.

Utility is different from pleasure. Quinine does not give pleasure to the patient but it certainly has utility, i.e. capacity to satisfy human wants. The patient would be free from malaria by taking quinine. Utility and satisfaction are two different things.A commodity possesses utility and gives satisfaction,

Again utility is a subjective concept and differs from person to person. For example, a non-vegetarian derives utility from fish and meat and to the vegetarian, fish and meat have no utility. Thus utility is not an absolute and inherent quality of an object. It is associated with the mind of the consumer.

Kinds of Utility

There are four kinds utility as discussed below :

From Utility:

Form utility is created when any matter is arranged or shaped into a desired from for the better satisfaction of human wants. When a carpenter makes chair from a log of wood, form utility is created. This type of utility is created in agriculture and all manufacturing industries.

Place Utility:

Utility created or added due to the change of place of a commodity is called place utility. Wood in the forest has little or no utility, But when it is transported to the town, its utility increases and it is sold at a high price.

Time Utility:

When utility increases with the change of time, it is called time utility. The supply of food grains like rice and wheat is plenty during the harvest season and hence their utlity is low. Storint and preserving them and carrying them over through time to periods of scarcity like rainy season add to their value. Such additional utility created is called time utility.

Service Utility:

Utility created by the personal services is called service utility. The services of lawyers, doctors, nurses, barbers, washerman etc. are the examples of his kind of utility. They satisfy our wants and sold and purchased in the market.