Each consumer tries to maximize the usefulness of a product or service that he intends to acquire. This usefulness, or desirability, is relative to other products or services that he will give up in order to get the product or service in question, since the purchasing power is limited. Usefulness is measured in special units that are known as utils.|
The usefulness of goods and services can be illustrated by a simple graph. The utility function is additive. The curve shows the relationship between the usefulness and the quantity of the goods consumed.
This model will help you to understand the influence of price policy on profit. Examine the four mutually substitutive goods (for example, four different types of candy). All of them have the different prices and different desirability from the consumer's perspective. As a rule, more expensive goods have higher usefulness, and this relationship is reflected by the usefulness curve.