Economic Utility

Economic utility is the satisfaction, usefulness or benefit that a person gains from consuming a good or service. Economists use it to explain why people choose some goods over others and how much they are willing to pay: consumers are assumed to spend their limited income in the way that gives them the most total utility. Utility cannot be measured directly, so modern economics usually works with rankings of preferences rather than precise numbers. A central idea is marginal utility, the extra benefit from one more unit, which usually falls as consumption rises and helps explain downward-sloping demand under supply and demand. Business writers also describe four types of utility created by producers: form, time, place and possession. In crypto, the word appears in the phrase "token utility", meaning a token's practical uses, as with a utility token. Also see behavioral economics.