ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In economics, the term utility refers to the happiness, benefit or value a consumer gets from a good or service. In other words, consumers are not satisficers who will settle for “good enough". This happiness or satisfaction is measured in a unit called a util.

Detailed explanation-2: -Consumption serves to satisfy a limited set of basic material needs. These mainly include the need for adequate food and shelter (a roof over one’s head and clothing). These basic needs can be satisfied with a very low level of consumption.

Detailed explanation-3: -The law of diminishing marginal utility states that all else equal, as consumption increases, the marginal utility derived from each additional unit declines. Marginal utility is the incremental increase in utility that results from the consumption of one additional unit.

Detailed explanation-4: -Economists use the term utility to describe the pleasure or satisfaction that a consumer obtains from his or her consumption of goods and services. Utility is a subjective measure of pleasure or satisfaction that varies from individual to individual according to each individual’s preferences.