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What is "Utility"  ?

Utility is the satisfaction received (we get) from the use of a particular product. For Example we eat "Apple" then we get some benefit, (satisfaction) eating the apple. Utility is a subjective topic, means how much utility you get from a particular product the other person may get different satisfaction from the same product.

How to measure "Utility"

Utility cannot be measured in Unit terms like others. Like Weight, Size, etc. Since Utility is subjective topic and we cannot measure the utility of the product though we can imagine to some extent the utility received from the particular product,

Different Approach

--- Cardinal Approach

--- Ordinal Approach

Vijay Gulya, Chartered Accountant
Terms Used

Total Utility, Marginal Utility, Average Utility, Law of Diminishing Utility, Consumer Equilibrium, Indifference Curve

Cardinal Approach

Total Utility, Marginal Utility, Average Utility, Law of Diminishing Utility, Consumer Equilibrium, Indifference Curve

Assumptions

--- Measurement of Utility Possible

--- Measurement of Utility in Rupees terms

--- Reasonable Quantity for consumption

--- Continous Consumption

--- Same quality of all units

--- Marginal utility of Rupees constant

--- Rational Consumer etc.

Read Other Topics

-- What is Demand

-- Rule of Demand

-- Elasticity of demand

-- Exception to the Rule of Demand

-- Supply

-- Rule of Supply

-- Elasticity of Supply

-- Cost behavior and Marginal Cost and Revenue

-- Markets under different situations

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