Define creation of utility and classify its three forms.

1.	Define creation of utility and classify its three forms.
Answer» Creation of utility (OR creating utilities): One of the major characteristics of a business is to create utility (i.e. usefulness) for a product or a service. This is called ‘creation of utility’. A business can create utility in three ways: 1. Form utility: If a person changes the form (i.e. shape, size, etc.) of a commodity to make it sellable we say he has created ‘Form utility’. For example, making ice-cream from milk. 2. Place utility: When goods are carried from place of production to place of consumption i.e. to the customers, we say ‘Place utility’ is created. For example, when we transport food grains from farms to market yards/ consumers we say we have created ‘Place utility’. 3. Time utility: When a manufacturer produces goods and stores them when it is not the right time to use such goods and sells them at the right time we say he has created Time utility’. For example, selling umbrellas in monsoon is creation of time utility.

Answer»

Creation of utility (OR creating utilities):

One of the major characteristics of a business is to create utility (i.e. usefulness) for a product or a service. This is called ‘creation of utility’.

A business can create utility in three ways:
1. Form utility:

If a person changes the form (i.e. shape, size, etc.) of a commodity to make it sellable we say he has created ‘Form utility’.
For example, making ice-cream from milk.

2. Place utility:

When goods are carried from place of production to place of consumption i.e. to the customers, we say ‘Place utility’ is created.
For example, when we transport food grains from farms to market yards/ consumers we say we have created ‘Place utility’.

3. Time utility:

When a manufacturer produces goods and stores them when it is not the right time to use such goods and sells them at the right time we say he has created Time utility’.
For example, selling umbrellas in monsoon is creation of time utility.

Define creation of utility and classify its three forms.

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