Utils

Definition

Utils, short for "utility," is an imaginary unit used to measure satisfaction or happiness derived from consuming goods and services. It represents subjective preferences that cannot be directly measured.

Analogy

Think of utils as points in a video game. Just like points represent your progress and success in the game, utils represent your level of satisfaction or happiness from consuming goods and services. The more utils you have, the happier you are.

Related terms

Marginal Utility: Marginal utility is the additional satisfaction gained from consuming one more unit of a good or service.

Indifference Curve: An indifference curve shows different combinations of two goods that provide the same level of satisfaction to an individual.

Diminishing Marginal Utility: Diminishing marginal utility states that as a person consumes more units of a good, the additional satisfaction they derive from each additional unit decreases.