Chapter 11, Problem 11AA

To determine

To discuss: The various types of utility.

Answer to Problem 11AA

There are four types of utility in economics. They are form, time, place and possession.

Explanation of Solution

Form utility means how much a product can meet a customer’s need and expectation. It is the incorporation of the desires of the customers into the features of the product that the company is offering.

Time utility means making the product available during that time when the customer needs the product thus streamlining the delivery time. It means deciding on the time in which product or services should be available to the customers.

Place utility refers to making the goods and services available physically to the customers. It involves increasing convenience for the potential customer to obtain their desired product or service.

Possession utility refers to the amount of satisfaction obtained by the customer from owing the product. Owing a valuable thing increases its possession utility. Also the easy of obtaining the product or service also increases possession utility.

Economics Concept Introduction

Introduction:

Utility- it refers to the benefits or value derived by a customer from the purchase of goods or services or both in exchange of monetary benefit.