Seven major types of utility
The seven major types of utility
The want satisfying power of a commodity is called utility, it is a quality possessed by a commodity or services to satisfy the human wants. Utility can also be defined as value in use of a commodity because the satisfaction which we get from the consumption of a commodity is its value in use. Below are the five types of utility and may take the following form:
1. Form utility:
When utility is created and or added by changing the shape or form of goods, it is form utility. For example when a carpenter makes a table out of wood, he adds to the utility of wood by converting it into a more useful commodity like furniture. He has created form utility.
2. Place utility:
When the furniture is taken from the factory to the shop for display in the market for sale, it leads to place utility. This is because it is transported from a place where it has no buyers to a place where it has a price tag.
3. Time utility:
When a farmer for example stores his wheat after harvesting for a few months and sells it when its price rises, he has created time utility and added to the value of the wheat.
4. Service utility:
When doctors, teachers, lawyers, engineers etc. for example satisfy human wants through their services, they have created service utility. It is acquired through specialized knowledge and skills.
5. Possession utility:
Utility is also added by changing the possession of a commodity. A book on economics theory has little utility for a layman. But if it is owned by a student of economics that means possession utility is created.
6. Knowledge utility:
When the utility of a commodity increase with the increase in knowledge about its use, it is the creation of knowledge utility through propaganda, advertisement etc.
7. Natural utility:
All free goods such as water, air, sunshine, etc, posses natural utility they have the capacity to satisfy our wants.
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six major characteristics of utility
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