10 Useful Examples

In economics, the utility It is the degree of satisfaction that a consumer has with respect to a good or a service. For example: The satisfaction obtained by consuming a food product.

Consumers consistently rate goods and services who acquire and positively evaluate those products that provide greater utility, that is, that provide more satisfaction and from which they can get more benefit.

In economics, it is argued that utility is subjective, because it depends on the tastes, preferences, budget and context of each consumer. It is because of this characteristic that it is considered that it is not easy to measure it.

However, utility can be represented by the utility function graph, which indicates the relationship between the satisfaction obtained and the amount of consumption of a good or a service.

In addition, in microeconomics, utility is considered to allow the study and analysis of consumption behaviors (the choices made by consumers). consumers), because when a good or service is very useful, more people want to buy it and, therefore, there is more demand for it. products. And that generally translates into increased profits for the manufacturer.

utility types

In economics, as it is considered that utility cannot be measured exactly, a simulation of the relationship between the consumption of a product and consumer satisfaction is carried out. For this, two types of utility are taken into account:

Marginal utility of consuming a perfume

In this case, it is seen how the total utility is increasing and the marginal utility begins to decrease from the second unit that the subject consumes. Furthermore, from the point of saturation (when the fourth unit is consumed) the marginal utility begins to be negative.

Useful Examples

1. Utility obtained by the consumption of glasses of juice

In this case, the total utility is increasing until the point of saturation (when the subject takes the sixth glass and makes the decision to stop consuming, because the units no longer provide him with benefit). Marginal utility is mostly diminishing.

1. Utility obtained by the consumption of pizza slices

In this case, the total utility is increasing until the point of saturation (when the subject consumes the fourth portion). From that moment on, it begins to decrease. Marginal utility is generally decreasing and is negative from the saturation point.

1. Utility obtained by the consumption of ice cream

In this case, the total utility is increasing until the second ice cream, with the third the saturation point is produced (when the subject does not want to consume more because he is satisfied). The marginal utility is diminishing.

1. Utility obtained by the consumption of chocolate bonbons

In this case, the total utility is increasing until the saturation point (when the person eats the fourth candy and is no longer hungry) and then begins to decrease. Marginal utility decreases, remains stable, and decreases again after the saturation point.

1. Utility obtained by the consumption of apples

In this case, the total utility is increasing until the point of saturation (when the person consumes the third apple) and, from that moment, it begins to decrease. The marginal utility is diminishing.

utility in accounting

In accounting, the term profit refers to the income earned in a business. There are two types of utility:

Gross profit obtained in a box factory

Examples of utility in accounting

1. Net profit and gross profit of a company that provides Internet service

1. Net profit and gross profit of a clothing store

1. Gross profit and net profit of a car factory

1. Net profit and gross profit of a tofu company

1. Net profit and gross profit of an eyewear factory

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