In economics, what does the term "utility" refer to?

The term "utility" in economics refers to a measure of satisfaction and well-being that individuals derive from consuming goods and services. This concept is central to understanding consumer behavior, as it helps to explain how choices are made in the pursuit of maximizing happiness or satisfaction. Economists often use the idea of utility to analyze how different goods and services provide varying levels of satisfaction and how these preferences guide consumer decisions and market demand.

An important aspect of utility is that it is subjective; different individuals derive different levels of satisfaction from the same good or service based on their personal preferences, circumstances, and needs. This subjectivity is crucial for understanding market dynamics, as it influences not only individual purchasing behavior but also overall demand in the economy.

By contrast, the other terms mentioned, such as economic growth, systems of regulation, and methods of cost analysis, do not encapsulate the personal and experiential nature of utility, which is specifically focused on individual satisfaction and well-being.