Question

In economics the term utility refers to the?

1) relative scarcity of a good or service
2) usefulness of a good or service
3) satisfaction that a consumer derives from a good or service
4) slope of a consumer's demand curve

Answer 1

In economics, utility is the satisfaction or usefulness a consumer gets from a good or service, which typically increases with consumption but decreases per unit due to the law of diminishing marginal utility.

Step-by-step explanation:

The term utility in economics refers to the satisfaction or usefulness that a consumer derives from a good or service. The notion of utility is subjective, but it is a critical element in understanding consumer behavior. The more of a good a person consumes, generally, the more utility they obtain, with the caveat of the law of diminishing marginal utility, which indicates that the additional utility gained from each subsequent unit of a good consumed is less than the utility derived from the previous unit. This is why the first slice of pizza usually provides more satisfaction than the sixth.

Utility refers to the satisfaction that a consumer derives from a good or service. Economists assume that consuming more of a good leads to greater utility, but the additional utility obtained from each additional unit declines. This is known as the law of diminishing marginal utility. For example, the first slice of pizza brings more satisfaction than the sixth.