Utility

What was the last thing you bought in a store?

Why did you buy it?

Were there any alternatives?

Why did you choose this item over something completely unrelated?

Utility

• used to refer to "happiness" or "satisfaction" by economists
• high utility = a lot of satisfaction
• low utility = little satisfaction

Utility is...

• relative
• If I have a refrigerator full of soda, how much satisfaction, or utility, will one more soda give me?

How do we Measure...

• utility?
• satisfaction?
• Think about utility in terms of price