Question

What is 'utility', and how does it relate to purposeful behavior?

Short answer

Utility measures a person's level of satisfaction after consuming a commodity. Utility helps weigh the extent to which the consumed good can serve the purposeful behavior.

Step-by-step solution

Meaning of utility

A person consumes a commodity to fulfill his needs. The consumed commodity may fulfill the need up to a certain level instead of fully satisfyingThe utility shows that the satisfaction level is associated with good when used to satisfy a human want.

For example, if a person is willing to pay $2 for 1 unit of apple and $1 for 1 unit of banana, the utility of an apple is $2, and the utility of a banana is $1. It concludes that apple carries the satisfying power of $2, and banana carries the satisfying power of $1 for the person. Thus, utility is the satisfying power that goods or services possess for fulfilling human wants.

The utility shows that the satisfaction level is associated with good when used to satisfy a human want.

For example, if a person is willing to pay $2 for 1 unit of apple and $1 for 1 unit of banana, the utility of an apple is $2, and the utility of a banana is $1. It concludes that apple carries the satisfying power of $2, and banana carries the satisfying power of $1 for the person. Thus, utility is the satisfying power that goods or services possess for fulfilling human wants.

Relationship between utility and purposeful behavior

Before coming to an economic decision, the consumer weighs the benefits and costs associated with it. An individual's purposeful behavior behind consuming a good or service is to satisfy their wants to the maximum.

When a commodity is consumed, the utility helps measure the benefits associated with the goods. With the help of utility, the consumer can project the extent to which the goods are going to meet the outcome. In this way, utility is related to purposeful behavior.