Utility and Purposeful Behavior

Utility 1

Utility and Purposeful Behavior

William Scanlon

EC0100

Prof. Nicole Rodieck

September 29, 2010

Utility 2

Utility and Purposeful Behavior

In economic terms, Utility, refers to the total satisfaction someone receives from consuming a good or service. The main objective of one’s intent or rather purposeful behavior, when purchasing goods and services is the achievement of getting that total satisfaction. Utility is a concept of renowned mathematician Daniel Bernoulli who believed that for average people, utility increases with wealth but at a decreasing rate. That is satisfaction may increase but not as often.

A consumer’s utility is very difficult to measure. This though can be determined indirectly with studying consumer behavior theories. They assume that consumers will try to maximize their utility.

The concept of Purposeful Behavior in business is an action performed to achieve a common purpose by making a commitment to satisfy a consumer with the purchase of their goods or services. When business commits to a single purpose it has a better chance to be successful. This behavior or decision making of course is not determined by a single factor. Price course is important in a consumers utility of a product but also

References: Brue, S. L., & McConnell, C. R.(2010). Essentials of economics (Ashford Custom 2nd ed.). New York: McGraw-Hill/Irwin.