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Economics Distinguish between

Utility Analysis · Maharashtra Board STD 12 Commerce / Arts (MSBSHSE - English Medium). 7 questions.

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Distinguish between

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7 questions · self-marked practice — reveal the answer and mark yourself.

Question 12 Marks
Form Utility and Time Utility.
Answer
Form Utility :

  1. Form utility arises when the structure of given material changes.
  2. E.g. Furniture made out of wood.
  3. Technology and intelligence creates form utility.

    Time Utility:

    1. Time utility is created by changing the time of utilisation.
    2. E.g. Wheat stored during harvest season and released during off season.
    3. Warehousing creates time utility.
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Question 22 Marks
Knowledge Utility and Possession Utility.
Answer
Knowledge Utility:

  1. Knowledge utility arises when a person acquires knowledge regarding a product.
  2. Use of mobile, computer, etc. creates knowledge utility.
  3. In this case, a consumer is interested to know various functions of product.
  4. Knowledge utility increases due to utilisation.

    Possession Utility:

    1. Possession utility arises when the ownership of a product is transferred from one person to another.
    2. Sale and purchase of goods creates possession utility.
    3. In this case, a consumer is interested to satisfy his wants.
    4. Possession utility increases due to demand.
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Question 32 Marks
Form Utility and Service Utiliity.
Answer
Form Utility :

  1. Form utility arises when the structure of given material changes.
  2. Furniture made out of wood is an example of form utility.
  3. It is related to material welfare.
  4. Form utility is mainly created by artisans like tailor, carpenter, etc.

    Service Utility :

    1. It arises when service is rendered by one person to another.
    2. Knowledge given by teacher to student is an example of service utility.
    3. It is related to non-material welfare.
    4. Service utility is mainly created by professionals like doctor, lawyers, etc.
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Question 42 Marks
Total Utility and Marginal Utility.
Answer
Total Utility :
    1. Total utility is the sum total of utilities derived from the consumption of all units in a given stock of a commodity.
    2. TU =Σ MU
    3. TU increases but at a diminishing rate.
    4. At point of satiety TU is maximum.
    5. After point of satiety TU starts diminishing.
    6. Numerical value of TU is always positive.
    7. TU indicates value-in-use.
    8. When TU is maximum, the MU is zero.
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  1. Marginal utility is the additional utility derived from consuming additional unit of a commodity.
  2. $MU_n = TU_n – TU_{n-1}$
  3. MU continuously diminishes.
  4. At point of satiety MU is zero.
  5. After point of satiety MU becomes negative.
  6. Numerical value of MU can be positive, negative or zero.
  7. MU indicates value-in-exchange.
  8. When the MU is maximum the TU is minimum.
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Question 52 Marks
Place Utility and Time Utility.
Answer
Place UtilityTime Utility
1. Place utility is created by changing the place of utilisation.(a) Time utility is created by changing the time of utilisation.
2. Transporting goods from one place to another, generally from place of abundance to place of scarcity, from place of manufacturing to place of consumption (Market), etc.(b) Storing of goods during abundance and releasing them during scarcity or goods are warehoused from time of production to time of consumption.
3. All types of transport service create place utility.(c) Warehousing service create time utility.
4. E.g. Food grains from village farm are sold in city markets.(d) E.g. Wheat stored during harvest time and released during off season.
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Question 62 Marks
Utility and satisfaction.
Answer
UtilitySatisfaction
1. Utility is a want satisfying capacity possessed by a commodity.(a) Satisfaction is actual realisation from consumption of a commodity.
2. It is what the commodity possesses.(b) It is what the commodity gives.
3. It is a means.(c) It is an end.
4. It is expected satisfaction before consumption.(d) It is actual realisation which comes after consumption.
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Question 72 Marks
Utility and Usefulness.
Answer
UtilityUsefulness
1. Utility is the capacity of a commodity to satisfy human wants.(a) Anything (goods or services) are useful if they satisfy human want and generate human welfare.
2. A product may have utility irrespective of the commodity is useful or harmful, desirable or undesirable.(b) A product is useful only when it is desirable or beneficial and does not do any harm to a person.
3. All commodities have utility such as car, clothes, even harmful products like drugs, liquor, cigarettes, narcotics, etc.(c) Products such as food items, medicine, clothes, etc. are useful. Also services such as education, recreation are useful to people.
4. The term utility is subjective in nature as it changes from person to person, from place to place and from time to time.(d) The term usefulness is absolute in nature, it never changes.
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