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PERFECTLY ELASTIC: An elasticity alternative in which infinitesimally small changes in price cause infinitely large changes in quantity. In other words, quantity is hyper, super, infinitely responsive to price. Any change in price, no matter how small triggers an infinite change in quantity. Perfectly elastic should be compared with other elasticity alternatives--perfectly inelastic, relatively elastic, relatively inelastic, and unit elastic.
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                           UTIL: A hypothetical unit of measurement of utility that is commonly used by economists to present hypothetical information about utility and consumer demand theory. The util measurement unit was developed as a convenient way to illustrate and discuss concepts such as total utility, marginal utility, and the law of diminishing marginal utility. However, because utility is not a measurable characteristic, the util does represent an actual unit of measurement, such as inches or pounds. The util (also frequently used in plural as utils) is the common textbook/classroom unit used to discuss the utility derived from consumption. In this way, a concrete discussion of a concept such as the law of diminishing marginal utility is possible by displaying "actual" utility values. Of course, even though these "actual" values are really hypothetical, the numbers can serve to drive home, to emphasize, to clearly illustrate, the underlying concept.Purely HypotheticalEconomists are fond of discussing hypothetical examples, especially when they illustrate important economic notions. The term util is a convenient way to discuss utility and the satisfaction of wants and needs that consumers obtain from using a good. It is often found in a sentence such as that made by the well-regarded economic instructor, Professor Grumpinkston, that, "Duncan Thurly receives 57 utils of satisfaction from consuming Manny Mustard's Deluxe Club Sandwich."The problem with such a statement about Duncan Thurly's satisfaction is that it is largely meaningless unto itself. There is no standard benchmark for comparison. In contrast, the measurements for other characteristics such as height, weight, income do have benchmarks. If the Professor stated that "Duncan Thurly paid $57 for one of Manny Mustard's Deluxe Club Sandwiches," or that "Duncan Thurly gained 57 pounds after eating one of Manny Mustard's Deluxe Club Sandwiches," then the Professor's students have clear benchmarks for comparison. The Professor's students likely understand the value of $1 and the weight of 1 pound. They also probably conclude that paying $57 for a sandwich or gaining 57 pounds from eating a sandwich is A LOT! But is obtaining 57 utils of satisfaction from eating a Deluxe Club Sandwich a lot or a little? Does this number mean Duncan really liked the sandwich or really hated the sandwich. Who knows? No one does! The util notion is hypothetical. There is no benchmark for comparison. All SubjectiveOne reason for the lack of a benchmark is that utility, the satisfaction of wants and needs, is itself a subjective concept. It falls into the same subjective, unmeasurable category that contains beauty, love, and happiness. In the same way that "beauty is in the eye of the beholder," so too is utility. For example, Duncan might contend that Mona Lisa, in Da Vinci's famous painting, is the most beautiful women that every existed. Others might disagree. Who is to say that Duncan is wrong? No one! To Duncan, Mona Lisa might be the essence of beauty, the embodiment of all that is beautiful. Others might have different views. There is no benchmark for beauty. Beauty is subjective.In the same way, every person who consumes one Manny Mustard's Deluxe Club Sandwiches might have a different notion of the satisfaction obtained. For Duncan, the sandwich might be extremely satisfying, for someone else, much less so. Who is to say that Duncan is wrong? No one! The utility Duncan obtains from the sandwich is purely subjective. Which means there is no way to compare Duncan's utility with that of another. There is no benchmark, no standard for comparison. Hypothetical, But UsefulIf utility is subjective and the util unit is largely meaningless in the real world, why bandy it about throughout the discussion of consumer demand theory? The util unit eases the exposition of economic concepts. If Professor Grumpinkston notes that Duncan receives 10 utils, 8 utils, 6 utils, then 4 utils from eating consecutive bites of Manny Mustard's Deluxe Club Sandwich, then he can illustrate that additional consumption of Manny Mustard's Deluxe Club Sandwich results in the law of diminishing marginal utility. The Professor could just have as easily use numbers like 100 utils, 80 utils, 60 utils, and 40 utils to illustrate this concept. The specific numbers are not important and ultimately meaningless. The important and meaningful part of the example is the law of diminishing marginal utility concept.A Measure of the Future?When the notion of utility as the satisfaction of wants and needs was developed in the late 1700s, economists thought that utility was, in principle, a measurable characteristic like height and weight. Hence, early exposition of utility using the util measurement was thought to be, in principle, a realistic reflection of human behavior.While the current, state-of-the-art, understanding is that utility is not measurable, some have speculated that future measurement might be possible. Psychologists, neurologists, and others who study human behavior and the brain have made great strides in quantifying mental activity. Perhaps in the future, a util measure might be constructed based on the activity of brain neurons, the pattern of brain waves, or the composition of brain chemicals. It might happen. Who knows what the future will bring? However, in the present day world of economic analysis the util measure of utility remains purely hypothetical and only finds use in the world of economic instruction.
Recommended Citation:UTIL, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: April 25, 2024].
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Today, you are likely to spend a great deal of time at a garage sale trying to buy either one of those memory foam pillows or a remote controlled train set. Be on the lookout for small children selling products door-to-door.
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