Q.What is Utility ? Explain the various types of Utility.

Utility is the capacity of a good or service to satisfy a human want. It is subjective, relative and ethically neutral. The important types of utility are form, place, time, service, possession and knowledge utility, each created by a different kind of economic activity.

Meaning of utility

Utility is the want-satisfying power of a commodity or service. It is the quality in a good because of which a consumer is willing to buy it. Utility is:

• Subjective — it varies from person to person;
• Relative — it depends on time, place and intensity of want;
• Ethically neutral — even a harmful article like liquor has utility if it satisfies a want;
• Different from usefulness — a good may have utility without being useful.

Types of utility

• Form utility: Created by changing the form or shape of a good — for example converting cotton into cloth or wood into furniture.
• Place utility: Created by moving a good from a place where it has less value to a place where it has more value, for example transporting vegetables from a farm to a city.
• Time utility: Created by storing a good and supplying it when it is most wanted, for example storing foodgrains for the off-season.
• Service utility: Created when personal services are rendered, as by a doctor, teacher or lawyer. …