Question

Read the article below and as you’re reading it translate how the ‘utility’ concepts in this week’s lesson are applied in the article. Note, for example, that the author talks about ‘value’ relative to price. This indicates to you that ‘utility’ is sometimes referred to as ‘value’ by some marketers.

Hall, Doug. (Dec 13, 2007). Jump Start: Perceiving is Believing. Bloomberg Business Week.

Preview the document

Now, look for a news headline that illustrates basic utility concepts (such as MU, TU, MU/P, etc.). Quote (post) the headline and cite properly (so that others like classmates and instructors can find your headline easily, using your citation), and explain precisely what utility concepts are illustrated and how they are applied in the story suggested by the headline. OR: Upload a photo of something you observed or noticed in a marketplace that illustrates utility and consumer choice. and explain precisely what utility concepts are illustrated and how they are applied in the shot that you’ve uploaded.

Answer 1

Utility is the want satisfying power of a commodity.There are different types of utility like time utility,possession utility etc...

Economist and philosophers thinking about consumer choice and satisfaction in the 19th century develop the concept of utility and came to be known as utilitarians.

Utility is the want satisfying power of a commodity assumed by the consumer to constitute his demand for that commodity or service.it defers from person to person and thus it is a relative term.it depend on time and place.for instance the same consumer may experience a higher or lesser utility for the same commodity at different time and different places.utlity implies expected satisfaction where as satisfaction stands for realised satisfaction .

​MU​​​=​​​​change in quantity​​/change in total utility​​​​

Figure 1. Marginal Utility Curve. Marginal utility decreases as consumption of a good increases. This illustrates the Law of Diminishing Marginal Utility.

Figure 1 shows the graph of marginal utility. Notice that marginal utility diminishes as additional units are consumed, which means that each subsequent unit of a good consumed provides less additional utility

Total utility is usually defined as a quantifiable summation of satisfaction or happiness obtained from consuming multiple units of a particular good or service. Utility and total utility are used in economic analysis of consumer behaviors within a marketplace. Total utility is often studied alongside Rational Choice Theory and the Law of Diminishing Marginal Utility. Rational Choice Theory says that consumers seek to maximize their utility with each unit of consumption. Consumer theory and demand theory suggest that consumer actions are driven toward utility maximization by attempting to acquire the most satisfaction possible in the most affordable way. In general, classical economic theories show that most consumers want to get the highest possible level of utility per unit for the money they spend.