Glosario

Economic Utility

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Economic utility is a term in economics that refers to the total satisfaction that a person can derive from consuming a good or service.

What Is Economic Utility?

Economic utility is a term in economics that refers to the total satisfaction that a person can derive from consuming a good or service. Modern economic theory posits four main types of utility: form, time, place, and possession.
Form utility refers to how well a product or service has been constructed to meet customers’ wants and needs. Secondly, time utility is when a company tries to match the availability of a good or service with the time-based increases in desire among customers. Thirdly, place utility refers to making goods or services physically available to potential customers. Finally, possession utility is the amount of use or perceived value that a consumer or owner gets from possessing a product.

Economic utility inheres not in the good or service itself but the relationship between the consumer’s wants and needs and the functionality of the good or service. For example, two meals when you’re hungry are not always better than one. The second meal might be just as good as the first but is much less useful if you are already full from the first meal.

Author: Gunnar Jaerv, COO of FDT

Bio: Gunnar Jaerv is the chief operating officer of First Digital Trust — Hong Kong’s technology-driven financial institution powering the digital asset industry and servicing financial technology innovators. Prior to joining First Digital Trust, Gunnar founded several tech startups, including Hong Kong-based Peak Digital and Elements Global Enterprises in Singapore.