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Economics Thesis by Slidesgo

The document discusses the concept of utility. It defines utility as a measure of how much satisfaction or enjoyment a consumer receives from consuming a good or service. Utility is subjective and varies between individuals and can change for the same individual based on their desires. The document then discusses two approaches to measuring utility - the cardinal approach which attempts to quantify utility with numeric values, and the ordinal approach which ranks preferences but does not quantify them. Both approaches have limitations in fully capturing an individual's true utility. Finally, the document briefly mentions there are different types of economic utility but does not elaborate on what those types are.

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Sheila Mae Fajutagana
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31 views10 pages

Economics Thesis by Slidesgo

The document discusses the concept of utility. It defines utility as a measure of how much satisfaction or enjoyment a consumer receives from consuming a good or service. Utility is subjective and varies between individuals and can change for the same individual based on their desires. The document then discusses two approaches to measuring utility - the cardinal approach which attempts to quantify utility with numeric values, and the ordinal approach which ranks preferences but does not quantify them. Both approaches have limitations in fully capturing an individual's true utility. Finally, the document briefly mentions there are different types of economic utility but does not elaborate on what those types are.

Uploaded by

Sheila Mae Fajutagana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Concept of

utility
Here is where your presentation begins
Utility definition
I
f
w
c
m
f
.
a
The satisfaction of a consumer is the basis of the utility
function. It measures how much one enjoys when he or
she buys something. A utility is a measure of how
much one enjoys a movie, favorite food, or other
goods. It varies with the amount of desire. One can
conclude the following conclusions
 A Utility of a good differs from one consumer to another.

 It keeps on changing for the same consumer due to change in


the amount of desires.

 It should not be equated with its usefulness.


Characteristic of Utility
 It is dependent upon human wants.
 It is immeasurable.
 A utility is subjective.
 It depends on knowledge.
 Utility depends upon use
 It is subjective.
 It depends on ownership.
Measurement of Utility
Cardinal Approach
In this approach, one believes that it is
measurable. One can express his or her
satisfaction in cardinal numbers i.e.,
the quantitative numbers such as 1, 2,
3, and so on. It tells the preference of a
customer in cardinal measurement. It is
measured in utils.
Limitation of Cardinal
Approach

01 02
In the real world, one One cannot add different
cannot always types of satisfaction
measure utility. from different goods.

03 04
For measuring it, it is It does not analyze
assumed that utility of the effect of a change
consumption of one in the price.
good is independent of
Ordinal Approach
In th
com
satis
com
first,
pref
qual
Limitation of Ordinal
Approach
 It
tw
 As
ut
 Th
eit
no
Types of Economic
Utility

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