What is utility?

I had an email from a reader after last week’s post, thanking me for the Economics of Limited Editions posts but mentioned that they didn’t quite grasp the difference between value and utility. This is exactly the sort of feedback I appreciate as it helps me to realise when I haven’t explained something properly. This is particularly important with utility, as it is one of the most fundamental concepts in economics and one which is well worth understanding. So today, I thought we’d have a look at the idea and why it is so central to the field.

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