Livestock Economics, Marketing and Business Management

VALUE, PRICE, INCOME AND UTILITY

Value

• In economics we use the term value in the sense of exchange.
• Value of commodity means purchasing power of the commodity.

Price

• The value is expressed in terms of money it is called price. Eg. A pack of rice.

Income

• Income is the remuneration paid to the service rendered by factors of production.

Real income and Money income

• Income can be expressed in terms of commodities or money.
• When we express income, the terms of commodities it is called real income.
• If we say that income of a person is five kg rice, he express his income in terms of commodity.
• When we express income in terms of money it is called money income.

Utility

• Utility means capacity to satisfy wants, i.e. want satisfying power of a commodity.
• Total utility may be defined as the total satisfaction derived from the consumption of all the goods or services at the disposal of the consumer, i.e. aggregate utilities derived.
• Different types of utilities are

Form utility

• Form utility is added when the processor of the goods (such as milk, paddy and oilseeds) transforms the material into finished products ready for consumption (such as cheese, rice and edible oil respectively).
• In doing so, he adds form utility to the raw products, i.e. form utility is created by the processing functions.

Time utility

• Time utility is added when products are stored from the time of production to the time of consumption.
• Time utility is created by the operations like storage in ware houses and godowns.

Place utility

• Place utility is added by the transporting system which transfers the goods from one point where it is not needed to another point where it is consumed.
• Hence, transporting agencies contribute to place utility.

Possession utility

• Possession utility is added to the product when its ownership is transferred to the final consumer.
• Thus, all the institutions and agents in the marketing chain which enable transfer of ownership are contributing to possession utility.