Concepts of Utility

What is utility?

• The cost of a product

• The profit made from a sale

• The satisfaction a consumer derives from consuming a good or service

• The price a consumer pays for a product

Which of the following best describes utility?

• It is the same for all consumers

• It varies among consumers

• It remains constant over time

• It is unrelated to consumer preferences

What are the three major factors that influence utility?

• Demand, supply, and price

• Place, time, and form

• Production, distribution, and consumption

• Profit, cost, and revenue

Form utility refers to:

• The usefulness of a commodity based on its structure

• The transportation of goods from one place to another

• The usefulness of goods based on the time they are consumed

• The satisfaction derived from advertising

An example of form utility is:

• Transporting goods from North to South

• Converting raw cotton into clothing

• Selling umbrellas during the rainy season

• Storing food for future use

Place utility is created when:

• Goods are produced in a factory

• Goods are stored in a warehouse

• Goods are transported from a low-utility area to a high-utility area

• Goods are changed from raw materials to finished products

Which of the following is an example of time utility?

• Selling warm clothes during winter

• Moving goods from rural to urban areas

• Changing wood into furniture

• Selling goods at a fixed price

Total utility refers to:

• The total satisfaction a consumer derives from consuming a commodity

• The price paid for a commodity

• The profit made from selling a commodity

• The total amount of a commodity produced in a country

What is the formula for total utility (TU)?

• TU = MU × Price

• TU = AU × Quantity Consumed

• TU = Quantity × Price

• TU = Demand × Supply

Marginal utility refers to:

• The extra satisfaction gained from consuming an additional unit of a commodity

• The total satisfaction from consuming a commodity

• The price of a product in the market

• The revenue earned from selling a product