Overview

(13) What does economic utility mean ?Utility is a term used by economists to describe the measurement of useful-ness that a consumer obtains from any good. Utility is the want satisfying power of any commodity or capacity of a commodity to give satisfaction. Utility may measure how much one enjoys a movie, or the sense of security one gets from buying a deadbolt. The utility of any object or circumstance can be considered. Some examples include the utility from eating an apple, from living in a certain house, from voting for a specific candidate, from having a given wireless phone plan. In fact, every decision that an individual makes in their daily life can be viewed as a comparison between the utility gained from pursuing one option or another.Such as medical industry case, when the patient had eaten the kind of medicine long time, but he can not feel more health. Then, the patient will feel less economic and enjoyable utility to continue to choose the kind of medicine to eat, because he feels this kind of medicine can not increase his body to be more health effectively. So, in psychological view point, this patient will lose enjoyable utility to choose to eat this kind of medicine and he also feels this kind of medicine's price ought be reduced when he continue to choose to eat this kind of medicine. Otherwise, any kinds of medicines which economic utility and enjoyable utility must be larger to compare this kind of medicine because he had not attempted to choose to eat other kinds of medicine. SO, enjoyable and economic utility depends on the consumer feels the product's function which can bring how much satisfactory level to let he/she to feel when he uses long time. If the product can bring long time satisfactory level to let he to feel, then the product will have much economic or enjoyable utility to the consumer. Otherwise, if the product can bring less time satisfactory level to let he to feel, then the product will have less economic or enjoyable utility to the consumer. So, every consumer economic or enjoyable utility is difference, it depends on whether he/she feels the product is worth to use.In economics, we usually say that an individual is rational if that individual maximizes utility in their decisions to care about life and money. That is, whenever an individual is to choose between a group of options, they are rational if they choose the option that, all else equal, gives the greatest success. Recalling that utility includes every element of a decision, this assumption is not particularly difficult to accept. If, when everything is taken into account, one decision provides the greatest utility, which is equivalent to meaning that it is the most preferred, then we would expect the individual to take that most preferred option. This should not necessarily be taken to mean that individuals who fail to quantify and measure every decision they make are behaving irrationally. Rather, this means that a rational individual is one who always selects that option that they prefer the most. The rationality assumption may seem trivial, but this is the best it is basic to the study of economics. This assumption gives a basis for modeling human behavior and decision making. If we could not assume rationality, it would be impossible to say what, when presented with a set of choices, an individual would select. The notion of rationality is therefore central to any understanding of microeconomics.

Full Product Details

9781079485264

Table of Contents

Reviews

Author Information

Tab Content 6

Customer Reviews

Recent Reviews

Countries Available