Utility

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DEFINITION of 'Utility'

1. An economic term referring to the total satisfaction received from consuming a good or service.

2. A company that generates, transmits and/or distributes electricity, water and/or gas from facilities that it owns and/or operates.

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BREAKING DOWN 'Utility'

1. A consumer's utility is hard to measure. However, we can determine it indirectly with consumer behavior theories, which assume that consumers will strive to maximize their utility. Utility is a concept that was introduced by Daniel Bernoulli. He believed that for the usual person, utility increased with wealth but at a decreasing rate.

2. Since consumer demand for utilities does not change dramatically with a change in price, these companies are regulated by the state or provincial and federal governments.

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RELATED FAQS
  1. What is the utility function and how is it calculated?

    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
  2. What are examples of some of the major global companies in the utilities sector?

    Some of the world's largest utility companies, by market capitalization, are Duke Energy (U.S.), GDF Suez (France) and the ... Read Full Answer >>
  3. To what extent are utility stocks affected by changes in interest rates?

    Utility stocks are definitely subject to interest rate risk and can be significantly impacted by changes in interest rates. Competition ... Read Full Answer >>
  4. How can you find the demand function from the utility function?

    A consumer's budget constraint is used alongside the utility function to derive the demand function. The utility function ... Read Full Answer >>
  5. What percentage of a diversified portfolio should be exposed to the aerospace sector?

    Diversification is an effective portfolio management technique used to prevent a sharp decline in an individual company or ... Read Full Answer >>
  6. What are the different ways that utility is measured in economics?

    It's difficult to measure a qualitative concept such as utility, but economists try to quantify it in two different ways: ... Read Full Answer >>
  7. What does it signify about a given product if the consumer surplus figure for that ...

    High consumer surplus for a particular product signifies a high level of utility for consumers and may carry some implications ... Read Full Answer >>
  8. What are the four types of economic utility?

    The four types of economic utility are form, time, place and possession. "Utility" in this context refers to the value, or ... Read Full Answer >>
  9. What is the average profit margin for a utility company?

    Profits in utilities range dramatically from country to country and region to region. This is partly due to barriers to entry ... Read Full Answer >>

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