what is utility in economics
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Utility is a term used by economists to describe the measurement of "useful-ness" that a consumer obtains from any good. Utility is the want satisfying power of any commodity or capacity of a commodity to give satisfaction. Utility may measure how much one enjoys a movie, or the sense of security one gets from buying a deadbolt. The utility of any object or circumstance can be considered. Some examples include the utility from eating an apple, from living in a certain house, from voting for a specific candidate, from having a given wireless phone plan. In fact, every decision that an individual makes in their daily life can be viewed as a comparison between the utility gained from pursuing one option or another.
Example: Sally wakes up in the morning, and her mother offers her the choice of a grapefruit or cereal. Sally, in an instant, compares the utility she would derive from both choices and selects the cereal. Sally's mother then needs to take Sally to school. She can either walk or drive. Sally's mother considers the benefits of exercise and fresh air, which compose the utility she would derive from walking, and also considers the time savings and comfort of driving. Sally's mother decides to drive.
In this example, it can be seen that utility is measured in numbers that are purely cardinal, rather than ordinal. The numbers used to measure utility (often in a unit called the "util") is useful only for comparison. If the utility given by one thing is 100 and the utility given by another is 12,000, we can only say that the utility of the latter is greater. We could not say that the individual gets "120 times more utility" from this option, because utility is not a quantity. Furthermore, the sign of utility may be positive or negative with no effect on its interpretation. If one option gives -15 utility and another gives -12, selecting the second is not, as it might seem, the "lesser of two evils", but can only be interpreted as the better option.
Also illustrated in the example above is that what may seem better for a person is not reflected in their utility. That is, Sally gains more utility from eating the cereal, but maybe the cereal is very unhealthy compared to the grapefruit. This consideration will be accounted for in Sally's utility according to how much she cares about it. If Sally does care about, in this case, the nutritional value of her food, this would mean that the grapefruit would provide greater utility than if she does not care about nutrition at all. The same is true for her mother's decision about driving to school. If she is environmentally conscious, driving would have given less utility than if she is not. These factors may, though not necessarily, affect the outcome of the decision. This point leads to the statement that, when measuring utility, we assume that all things have been taken into account. The amount of utility that Sally gets from her cereal takes into account all factors relevant to that decision.
Utility can be seen as a measure of how much one values a particular good. This depends entirely on the preferences of that individual, rather than some external, or universal measure. So while an apple and an orange may give utility values of 5 and 10 respectively to one individual, they may give 1,250 and -180 to another. These values depend only on how they are valued case . In ordinary uses the term utility is used to denote usefulness but in economics the term utility is used in different meaning and in wider sense .It is also developed by a very great economist PRINCE SHARMA a student of D.A.V University Jalandhar that,"utility is very very important and very very good."
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