Final answer:
The 'utility' of an outcome depends on the value from the decision maker's perspective. Utility indicates the level of satisfaction a consumer gets from a good or service and is subjective. It guides consumer choices and decisions to maximize satisfaction.
Step-by-step explanation:
The utility of an outcome depends on how valuable the outcome is from the decision maker's point of view. Utility refers to the satisfaction or usefulness derived from consuming a good or service. The concept of utility is central to understanding consumer choices and the decision-making process, as individuals seek to maximize their utility within their budget constraints. Utility is subjective and can differ from person to person based on personal preferences and the value they place on different goods and services.
Economists use the term 'utility' to describe the level of satisfaction or pleasure that an individual receives from consuming a good or service. This is an essential component in understanding how people make choices, as they aim to increase their overall utility. Additionally, the concept of marginal utility and diminishing marginal utility plays a significant role in consumer choice, indicating that each successive unit of a good consumed generally provides less satisfaction than the previous one, a phenomenon known as the law of diminishing marginal utility.
When making a decision, rational consumers weigh the perceived benefits against the perceived costs, aiming for the option that provides them with the highest level of utility. Thus, utility is the correct answer to the student's question.