Utility In Economics

Utility In Economics

Utility, in economics the power of a commodity or service to give satisfaction by meeting a want. Economics does not inquire into the ethics or morals of wants. Food, cigarettes, holidays have utility and are of economic significance if they satisfy wants. Economics does not distinguish between classical music and jazz, Shakespeare or Agatha Christie or James Bond. This is because it analyses what is and does not judge what should be. Its interest is in the utility of a commodity or service at the margin, that is, the increase or decrease in total utility accompanying an increase or decrease in the supply, because this is where decisions are made and marginal utility (which usually diminishes as the quantity increases) enters into the determination of value and price. Thus fresh air is so abundant in everyday life that at the margin, i.e. a little more or less, it would make no difference and people are not prepared to pay anything for it. But in a submarine it may mean the difference between life and death and could command a high price.

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this consumeraffairs.org.uk site is therefore not a final statement of economic doctrine.

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