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By changing the shape or form of a commodity (Form utility)

If the physical form of a commodity is changed, its utility will increase. For instance, the utility of cotton increases, if it is converted into clothes. This is known as form utility.

By shifting a commodity from one place to another (Place utility)

Sometimes, a product or a commodity is not so useful in one place, but is more useful in other places. Thus, the commodity is shifted from a place to a place where it is of a greater use.



Rice grown in a paddy field is of some use to the farmers. But, when it is transported to big cities where population is large, it gives more satisfaction to a larger number of people.

By producing a commodity and storing it for future use (Time utility)

Seasonal products are not available throughout the year. So, we can store them in order to make them available during off-seasons.



In order to make seasonal foods available throughout the year, they can be canned. During rainy season, water is stored in reservoirs and it is used at a later time. This increases the utility of the stored water.

Personal utility (Ownership utility)

Making a commodity more useful, by transferring the ownership. It involves making use of personal skills in the form of services like services of doctors, interior decorators, event organizers, lawyers, accountants, etc.
  • Example of various utility:
In the production of cotton cloth, firstly, cotton is changed into cotton cloth at the spinning and weaving mill (form utility). Then, it is taken to a place where it is to be sold (place utility). Since cotton clothes are used during summer, they will be retained until such time it is required by the purchasers (time utility). Throughout this process, the services of people are involved (personal utility).
  • Production does not include:
    • Work of the family member out of love & affection
    • Service performed out of feeling of public spirit
    • Goods for own consumption
Production is a co-operative process, not a job of any single factor of production.
The production process as follows:
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