Ordinarily, utility means usefulness. But in economics, utility means the power of goods and services to satisfy human wants. If a commodity can satisfy a human want, it is said that the commodity has utility.
So want satisfying capacity of a commodity is known as utility in economics.
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According to professor Hibdon,
“Utility is the ability of a good to satisfy a want.”
According to Benham,
“Utility is measurable in units and it refers to value-in-use of a commodity.”
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Utility and usefulness are not same. We can know the difference between the two concepts by citing an example here. Wine cans satisfy the want of a person. So wine has utility for those who take it. On the other hand, wine is no useful rather it is harmful for those who take it. So wine has utility but it has no usefulness.
Sometimes utility is confused’ with pleasure. For example, injections have utility because they can cure several diseases. But injections do not give us pleasure. Similarly, lariago, quinine is tablets given to patients to make them free from malaria. So such tablets have utility but the tablets do no; give pleasure to “the patient.
Again utility and satisfaction are two different things. Utility leads to satisfaction. A commodity possesses utility and after the use of the commodity, we get satisfaction.
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So utility is the quality of a commodity which can satisfy a human want. But the moment the commodity is put to use (or consumed) it gives satisfaction. So utility is expected satisfaction.
However, utility is subjective. It is associated with the mind of the consumer. It varies from person to person. It carries a bearing in the minds of a person. For example, a glass of water has utility for me if I am thirsty but on the other hand, the same glass of water has no utility for a person if he is not thirsty.
So the conclusion is that utility is not inherent in a commodity (or object). So utility is purely connected with the human mind. The same commodity will give different utility to different persons. So utility differs from person to person, place to place and time to time.
From the above analysis we knew that:
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1. Utility and usefulness are not same things;
2. Utility is different from pleasure;
3. Utility and satisfaction are two different things. A commodity possesses utility and after the use of the commodity, we get satisfaction. So utility is expected satisfaction;
4. Utility is not an absolute and inherent quality of a commodity (or object). It is subjective and associated with the mind of the consumer;
5. Utility cannot be measured in quantitative terms. It means cardinal measurability of utility is not possible and
6. Utility differs from person to person, place to place and time to time.