Question

Define the concept of utility.

Answer 1

"Utility" is an economic term introduced by Daniel Bernoulli referring to the total satisfaction received from consuming a good or service. The economic utility of a good or service is important to understand because it will directly influence the demand and therefore price, of that good or service. A consumer's utility is hard to measure, however, it can be determined indirectly with consumer behavior theories which assume that consumers will strive to maximize their utility.