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Glossary

Economic Utility

November 21, 2023 - Around 2 mins mins to read

Understanding Economic Utility

Economic utility, a concept in economics, refers to the overall satisfaction that individuals obtain from consuming goods or services. In contemporary economic theory, there are four main types of utility: form, time, place, and possession.

Form utility relates to how effectively a product or service meets the desires and needs of customers. Time utility, on the other hand, involves aligning the availability of a good or service with the temporal increase in customer demand. Place utility focuses on making goods or services physically accessible to potential customers. Lastly, possession utility refers to the perceived value or usefulness that consumers or owners derive from possessing a product.

Economic utility is not inherent in the good or service itself, but rather in the relationship between the consumer’s desires and needs and the functionality of the product or service. For example, having two meals when you’re already full may not necessarily be better than having just one. The second meal may be equally enjoyable, but it becomes less useful when you are already satisfied from the first meal.

Author: Gunnar Jaerv, COO of FDT

Bio: Gunnar Jaerv serves as the chief operating officer of First Digital Trust, a technology-driven financial institution in Hong Kong that supports the digital asset industry and provides services to financial technology innovators. Prior to his role at First Digital Trust, Gunnar founded various tech startups, including Peak Digital in Hong Kong and Elements Global Enterprises in Singapore.

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Glossary

Economic Utility

Understanding Economic Utility

Economic utility, a concept in economics, refers to the overall satisfaction that individuals obtain from consuming goods or services. In contemporary economic theory, there are four main types of utility: form, time, place, and possession.

Form utility relates to how effectively a product or service meets the desires and needs of customers. Time utility, on the other hand, involves aligning the availability of a good or service with the temporal increase in customer demand. Place utility focuses on making goods or services physically accessible to potential customers. Lastly, possession utility refers to the perceived value or usefulness that consumers or owners derive from possessing a product.

Economic utility is not inherent in the good or service itself, but rather in the relationship between the consumer’s desires and needs and the functionality of the product or service. For example, having two meals when you’re already full may not necessarily be better than having just one. The second meal may be equally enjoyable, but it becomes less useful when you are already satisfied from the first meal.

Author: Gunnar Jaerv, COO of FDT

Bio: Gunnar Jaerv serves as the chief operating officer of First Digital Trust, a technology-driven financial institution in Hong Kong that supports the digital asset industry and provides services to financial technology innovators. Prior to his role at First Digital Trust, Gunnar founded various tech startups, including Peak Digital in Hong Kong and Elements Global Enterprises in Singapore.

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