Utility is a property common to all commodities and services desired by a person. It has no physical or material existence and so it is not inherent in a commodity. Anyone who uses it will get it. As long as a commodity has some use, i.e., a capacity to satisfy consumer want, it has utility.
Thus, utility can be defined as the want satisfying power of the commodity. It relates to inner sentiments and emotions and resides in the mind of the consumer. Further, utility is subjective in nature, depending upon the mental makeup of a particular consumer.
A South Indian may relish black coffee, while a Punjabi may hate it. Thus, utility varies from consumer to consumer and is different even for the same consumer, at different times, places, seasons and under different circumstances. For instance, different levels of utilities are derived from the consumption of ten portions of ice-cream within a day.
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Utility has nothing to do with usefulness. Alcohol may be harmful for health, but, it is paid for since it possesses utility. Possession of gun by a thief or decoit may be dangerous or illegal, but gun has utility for them and commands a price. In Economics, the concept of utility is legally, morally, socially and ethically neutral.
Sometimes, utility is equated with satisfaction, though, actually it is clearly different from satisfaction. Utility is what consumer thinks, whereas satisfaction is what consumer gets. Therefore, utility is expected satisfaction and satisfaction is realised utility. When a consumer plans the purchase of a commodity, he actually compares the price he is going to pay and the utility he is expecting from it.
The decision of a consumer to buy (or not to buy) a commodity depends upon its utility and not satisfaction as satisfaction is derived only after consumption. Thus, utility can exist without consumption, but satisfaction will necessarily come only after actual consumption.
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However, for most of the goods, expected satisfaction is nearly same as realised satisfaction and so these are used synonymously in the whole theory of consumer behaviour for the sake of convenience.