UTILITY
Our basic needs are simple, but our additional individual wants are often
very complex. Commodities of different kinds satisfy our wants in different
ways. A banana, a bottle of medicine and a textbook satisfy very different
wants. The banana cannot satisfy the same wants as the textbook.
This characteristic of satisfying a want is known in economics as its “utility
”. Utility, however, should not be confused with usefulness. For example,
a submarine may or may not be useful in time of peace, but it satisfies a
want. Many nations want submarines. Economists say that utility
determines “the relationship between a consumer and a commodity”.
Utility varies between different people and between different nations. A
vegetarian does not want meat, but may rate the utility of bananas very
highly, while a meat-eater may prefer steak. A mountain-republic like
Switzerland has little interest in submarines, while maritime nations rate
them very highly.
Utility varies not only in relation to individual tastes and to geography,
but also in relation to time. In wartime, the utility of bombs is high, and
the utility of pianos is low. Utility is therefore related to our decisions
about priorities in production-particularly in a central planned economy.
The production of pianos falls sharply in wartime.
The utility of a commodity is also related to the quantity which is available
to the consumer. If paper is freely available, people will not be so
interested in buying too m6uch of it. If there is an excess of paper, the
relative demand for paper will go down. We can say that the utility of a
commodity therefore decrease as the consumer’s stock of that commodity
increases.
Reading Comprehension
Exercise 1: Answer the following questions.
1. What is the basic different between basic needs and additional
individual wants?
= Our basic needs are simple, but our additional individual wants are
often very complex.
2. What is your understanding on Utility? Is it the same as usefulness?
= This characteristic of satisfying a want is known in economics as its
“utility”. Utility, however, should not be confused with usefulness.
3. Utility varies between:
a. People: a vegetarian and meat eater
= A vegetarian does not want meat, but may rate the utility of bananas
very highly, while a meat-eater may prefer steak.
b. Time: war-time and peace-time
= Utility varies not only in relation to individual tastes and to geography,
but also in relation to time. In wartime, the utility of bombs is high, and
the utility of pianos is low. Utility is therefore related to our decisions
about priorities in production-particularly in a central planned economy.
The production of pianos falls sharply in wartime.
c. Place: a mountain-republic and a maritime nation
= A mountain-republic like Switzerland has little interest in submarines,
while maritime nations rate them very highly.
d. Quantity: increasing stock and decreasing stock
= The utility of a commodity is also related to the quantity which is
available to the consumer. If paper is freely available, people will not be
so interested in buying too much of it. If there is an excess of paper, the
relative demand for paper will go down. We can say that the utility of a
commodity therefore decrease as the consumer’s stock of that commodity
increases.
Explain each of them and give examples!!!
Exercise 2: True or False
1. Our basic needs are complex.
= False, Our basic needs are simple, but our additional individual wants
are often very complex.
2. Vegetarians rate the utility of meat very highly.
= False, A vegetarian does not want meat, but may rate the utility of
bananas very highly, while a meat-eater may prefer steak.
3. The demand of paper goes down ifthe quantity of paper increases.
= True, If paper is freely available, people will not be so interested in
buying too much of it. If there is an excess of paper, the relative demand
for paper will go down.
Vocabulary
Exercise 1: Find single words in the text for which these words could be
substituted.
1. Extra : Additional
2. Quality : Excellence
3. Coastal : Seaside
4. Likes and dislikes : Personal preferences
5. Preferences : Likes and dislikes
Exercise 2: Fill in the correct answer.
Bargain supplies government invest economists
1. The government of a capitalistic country is not to be expected to
concern with central planning.
2. In some systems it is of course possible for an individual to supplies
over prices.
3. Economists call this tendency the Law of Diminishing Marginal Utility.
4. Bargain of many commodities can generally be adjusted to suit market
conditions.
5. He decided to invest his capital in the new enterprise.
Structure
Exercise 1: Identify Passive or Active sentences.
1. The grapes are grown in California. (Passive)
2. The police didn’t find the robber last week. (Active)
3. My friends have been looking forward to meeting her. (Active)
4. I will never forget this experience. (Active)
5. The movie was being made in Hollywood. (Passive)
6. His hair was cut by a professional. (Passive)
7. The first fast food restaurants were opened in the USA in 1916. (Passive)
8. Henry Ford invented the assembly line. (Active)
9. Everybody was shocked by the terrible news yesterday. (Passive)
10. When the manager arrived, the problem has already been solved.
(Passive)
Exercise 2: Change the following sentences into passive sentences.
1. We set the table
= "The table was set by us" or "The table is set by us."
2. We have done our homework.
= "Our homework has been done by us"
3. The government is planning a new road near my house.
= “A new road is being planned near my house by the government”
4. My grandfather built this house in 1943.
= “This house was built in 1943 by my grandfather”
5. Somebody should do the work.
= “The work should be done by somebody”
6. A workman will repair the computer tomorrow.
= “The computer will be repaired by a workman tomorrow”
7. Somebody must have taken my wallet.
= “My wallet must have been taken by somebody”
8. Susan puts the bags on the floor.
= “The bags are put on the floor by Susan”
9. An old woman feeds the pigeons.
= "The pigeons are fed by an old woman"
10. She has just foud her cat in the garden.
= "Her cat has just been found by her in the garden."
