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

Short Answer

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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

01

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.

02

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.

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Most popular questions from this chapter

Match each term with the correct definition.

• Economics

• Opportunity cost

• Marginal analysis

• Utility

e. The next-best thing that must be forgone in order to produce one more unit of a given product

f. The pleasure, happiness, or satisfaction obtained from consuming a good or service

g. The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity

h. Making choices based on comparing marginal benefits with marginal costs

Pham can work as many or as few hours as she wants at the college bookstore for \(12 per hour. But due to her hectic schedule, she has just 15 hours per week that she can spend working at either the bookstore or other potential jobs. One potential job at a café will pay her \)15 per hour for up to 6 hours per week. She has another job offer at a garage that will pay her \(13 an hour for up to 5 hours per week. And she has a potential job at a daycare center that will pay her \)11.50 per hour for as many hours as she can work. If her goal is to maximize the amount of money she can make each week, how many hours will she work at the bookstore?

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Potatoes cost Janice \(1 per pound, and she has \)5.00 that she could possibly spend on potatoes or other items. If she feels that the first pound of potatoes is worth \(1.50, the second pound is worth \)1.14, the third pound is worth \(1.05, and all subsequent pounds are worth \)0.30 per pound, how many pounds of potatoes will she purchase? How many pounds will she purchase if she has only $2 to spend?

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