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Investments glossary

Utility


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Quotes of the day:

Truth may be stretched, but cannot be broken, and always gets above falsehood, as does oil above water.

— Miguel Cerbantes

Utility is a term in economics that refers to the total satisfaction received from consuming a good or service. Economic theories based on rational choice usually assume that consumers will strive to maximize their utility. The economic utility of a good or service is important to understand, because it directly influences the demand, and therefore price, of that good or service. In practice, a consumer’s utility is impossible to measure and quantify. However, some economists believe that they can indirectly estimate what is the utility for an economic good or service by employing various models.

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