Households

Need to know

What you need to know

• Utility is the satisfaction or economic welfare gained from consumption.
• It is a subjective concept, varying between individuals and over time.
• Economists use a hypothetical unit, 'utils', for theoretical analysis.
• The core assumption is that rational consumers aim to maximise their total utility.

Explanation

Households

1. Utility is the satisfaction or economic welfare gained from consumption.
2. It is a subjective concept, varying between individuals and over time.
3. Economists use a hypothetical unit, 'utils', for theoretical analysis.
4. The core assumption is that rational consumers aim to maximise their total utility.