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.

INVESTOPEDIA EXPLAINS '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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