Utility is the satisfaction derived from____________

Step 1: Analyze the question The question asks where utility, a key concept in economics, comes from.

Step 2: Explain the concept Utility is the satisfaction, pleasure, or benefit a consumer gets from using (consuming) a good or service. It is a measure of want satisfaction.

• Production is creating goods and services (it creates utility, but it is not where the satisfaction is derived).
• Distribution is moving goods from producers to consumers.
• Demand is the quantity of a good consumers are willing and able to buy at a given price.
• Consumption is the actual use of goods and services to satisfy wants.

Step 3: Work through the options

• A. Production: Production adds utility (form utility), but the satisfaction itself is not derived from producing. Incorrect.
• B. Distribution: This adds place and time utility, but again it is not where satisfaction is derived. Incorrect.
• C. Consumption: When you eat a plate of jollof rice or use a phone, you get satisfaction. That satisfaction is utility. Correct.
• D. Demand: Demand is driven by expected utility, but utility is not derived from demand itself. Incorrect.

Step 4: Answer Utility is the satisfaction derived from consumption, which is option C.

Exam tip: Remember "Utility = Use." Satisfaction comes when a good is used or consumed. Also note that production creates utility, while consumption yields it. JAMB often tests this difference.