Question

Give reason or explain:

1. Utility is a subjective concept.

2. Utility and happiness are different.

3. Utility is ethically neutral.

4. Utility is a psychological term.

Answer 1

1) Utility is the satisfaction that a consumer expects to derive from the consumption of a particular good. It is a subjective concept as it varies from person to person and from time to time. That is, a consumer defines a utility for himself. For example, a commodity, say apples, provides different levels of satisfaction to different persons. Also, the same person can derive different levels of satisfaction from the consumption of apples, at different points of time (for example, at the time of illness, the apples may provide a higher level of satisfaction to the consumer).

2) Utility and happiness are two different concepts. On one hand, utility is the want satisfying capacity of a commodity. On the other hand, happiness is a state of mind. It is an expression of the feeling of satisfaction. Moreover, utility is the anticipated level of satisfaction while happiness is actually realised by the consumer.

3) Utility does not discriminate between commodities on the basis of their characteristics such as good or bad, moral or immoral, etc. It simply implies that a commodity that possesses utility may or may not be ethically good. It just satisfies the consumer even if it is not socially desirable. For instance, commodities such as cigarettes, drugs and alchohol may fulfill satisfaction of a particular consumer despite the fact that they are socially undesirable.

4) Utility is a psychological term as it is difficult to measure utility in terms of numbers. That is, it cannot be measured cardinally, though for simplicity, we assume it to be measured in terms of numbers. Also, it cannot be seen or touched, but can only be experienced. Utility can only be measured ordinaly. For instance, a hungry person, after having food, derives a utility.