Dr Alfred Marshall has explained utility analysis of demand in his book “PRINCIPLES OF ECONOMICS” published in 1890. His study of consumer’s demand, which depends on the utility or “the want satisfying capacity of a commodity”, is based on the marginal utility analysis.


1] Utility is the basis of demand – A consumer demands a commodity because   it has a utility ie the capacity to satisfy his want. Therefore utility is the basis of demand as well as law of demand.

2] Utility is relative – (changes from time to time and place to place) eg – umbrellas/ woollens have utility in the rainy/winter season. eg –oxygen cylinder has more utility at a higher altitude than sea level.

3] Utility is subjective – (changes from person to person) Utility is a psychological concept. It shows a relation between subject and object ie we think of a commodity in relation to our want. Eg

4] Utility is not visible (abstract)–Utility is the capacity/ability of a commodity to satisfy human wants. It is intangible and has no physical existence. It is felt /experienced by the consumer but cannot be seen.

5] Utility is multipurpose – The same commodity can satisfy many wants. Electricity can be used lights A.C fan generators etc. Thus different people will buy the same commodity to satisfy different wants. Utility changes according to use. Eg electricity has a greater utility for lightening than for ironing. Thus different people will purchase this commodity to satisfy different wants.

6] Utility is free of ethical considerations – (it is morally colourless) In economics as long as a commodity can satisfy a want it has utility irrespective of whether the want being satisfied is good or bad, right or wrong, desirable or undesirable, moral or immoral etc. eg knife for cutting vegetables (or for killing) ,a rope for tying luggage ( or for committing suicide), consumption of liquor, opium etc.

7] Utility is different from usefulness – In ordinary language utility and usefulness are used as synonyms but in economics, utility is the want satisfying capacity of a commodity whereas usefulness necessarily confers a benefit on the consumer.  Eg nuclear weapons are harmful however they have utility as they satisfy a want. Nuclear power is used for electricity has both utility and usefulness.

8] Utility is different from pleasure – Utility the want satisfying capacity of a commodity precedes   consumption whereas pleasure is a feeling of delight experienced by a person after satisfying a want therefore follows consumption. Not all commodities having utility yield pleasure but all commodities which yield pleasure have utility. Eg an injection satisfies a patients want to get better but he gets no pleasure.

9] Utility is different from satisfaction – Utility the want satisfying capacity of a commodity precedes consumption whereas a feeling of satisfaction is experienced by a person after satisfying a want therefore follows consumption. e.g.

10] Utility depends on the intensity of the want – Utility is a direct function of the intensity of the want. Greater the intensity of the want, greater will be the utility.

11] Utility cannot be cardinally measured – Since utility is subjective and psychological in nature and can only be experienced, it cannot be precisely measured in numerical terms.

12] Utility diminishes with increase in consumption – As a want is satisfied in the process of consumption it’s intensity diminishes and therefore the utility derived will also diminish.

13] Utility increases with knowledge – Due to research and technology the knowledge about new goods and new uses of various goods will be discovered. Therefore as knowledge increases utility increases.       Eg – invention and use of mobile phones

Therefore as Mrs Joan Robinson says, “utility is the quality in a commodity that makes individuals want to buy them, and the fact that individuals want to buy the commodity shows that they have utility.”

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