Which of the following best defines the term utility in economics?

Utility in economics refers to the satisfaction or pleasure derived from consuming goods and services. It is a subjective measurement that varies among individuals, reflecting their preferences and desires. Therefore, the definition that aligns best with this understanding is that utility represents the usefulness of a good or service in terms of the satisfaction it provides to consumers.

The concept encompasses various forms, such as total utility, which is the overall satisfaction from consuming a combination of goods, and marginal utility, which is the additional satisfaction gained from consuming one more unit of a good or service. Understanding utility is crucial for analyzing consumer behavior and choices, as individuals seek to maximize their utility with the limited resources available to them.

The other definitions do not accurately reflect the notion of utility. The total output of an economy pertains to its productivity and gross domestic product (GDP), while production costs relate to expenses incurred in manufacturing goods. Interest rates on savings are financial terms that influence investment and savings behavior but do not encapsulate the personal satisfaction aspect that utility encompasses.