Utility refers to the ability of a good or service to satisfy a want. The document discusses several key concepts regarding utility: - Utility is subjective and relative to the individual. It is also independent of morality. - Total utility is the sum of utility from consuming all units of a good. Marginal utility is the additional utility from consuming one more unit. - The law of diminishing marginal utility states that as consumption increases, the marginal utility of additional units declines and can become negative. - Consumer equilibrium occurs when the marginal utility per rupee spent equals the marginal utility of money, maximizing satisfaction within a budget constraint.