Future Business Leader Achievments (FBLA) Economics Practice Exam

In economic terms, what does "utility" refer to?

1. The satisfaction received from consuming a product

2. The cost of production

3. The quantity of goods

4. The total revenue generated

The correct answer is: The satisfaction received from consuming a product

Utility refers to the satisfaction or pleasure that a consumer derives from consuming a product or service. It is a fundamental concept in economics that helps explain decision-making and consumer behavior. When individuals make choices about what to buy, they typically aim to maximize their utility—essentially, they want to get the most satisfaction from their limited resources. In this context, the focus is on how consumers evaluate the benefits of different goods and services, often weighing their preferences and the relative satisfaction they expect to receive. The idea of utility encompasses both tangible and intangible benefits, influencing not only individual choices but also market demand. The other options listed relate to different economic concepts. The cost of production pertains to the expenses incurred in creating goods, the quantity of goods refers to the amount of product available, and total revenue generated is the income received from sales. Each of these concepts is important in its own right, but they do not capture the essence of consumer satisfaction that utility fundamentally represents.