Question

The term utility refers to the?

1) usefulness of a good in relation to its scarcity
2) necessity of a good
3) price of a good
4) number of goods a consumer has
5) pleasure or satisfaction a consumer receives upon consuming a good

Answer 1

Utility refers to the 5) pleasure or satisfaction derived from consuming a good, is subjective, and varies per person and situation. As more of a good is consumed, the additional satisfaction obtained usually decreases, known as the law of diminishing marginal utility.

Step-by-step explanation:

The term utility refers to the pleasure or satisfaction a consumer receives upon consuming a good. Utility is a concept in economics that describes how individuals derive satisfaction from goods and services. This utility is subjective and varies from one person to another and from one consumption moment to the next. It factors into consumer choices, where individuals decide how to allocate their resources to maximize their utility. Economists also talk about the law of diminishing marginal utility, which explains that while the consumption of goods generally brings satisfaction, the marginal utility or additional satisfaction gained from consuming successive units of the same good tends to decrease.