Social utility

economic-dictionary

The social utility is that attribute of the goods and services required to consider that a population has been able to satisfy the minimum of its needs.

In other words, goods of social utility are also called basic necessities such as food, housing and drinking water.

The goods of social utility are then essential for the survival of the people. They are also in the category of normal goods because their demand increases when the consumer's income increases.

Another point to take into account is that these goods of social utility have an inelastic demand. This, due to the fact that a variation in the price, even of great magnitude, practically does not affect the quantities demanded. A) Yes. even if the cost of the basic food basket (such as rice or potatoes) rises, people will continue to buy it.

This concept of social utility can be used, for example, when defining the products of which the State seeks to ensure supply.

Likewise, there may be certain goods of social utility over which the Government could control their price in order to guarantee that there are no sharp increases. This usually happens, for example, in the case of fuels. Thus, the State sometimes constitutes a contingency fund whose resources are used to compensate producers in the event of a rise in the international price. In this way, they will not have to pass this increase on to consumers.

Social utility versus public utility

It is also worth distinguishing the social utility from the public utility, which is that activity, good or service that is of benefit or collective interest, either for the citizens of a country or on a larger scale, for humanity as a whole.

For example, a cultural event such as a typical dance festival could be considered of public utility, but not of social utility.

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