Power in an electrical circuit
If a current is flowing and there is a voltage difference present it must be dropped across a resistance. Passing a current through a resistance (and thus creating a voltage) dissipates power. The instantaneous power dissipated by a current flowing through given resistance is given by P = IV, (where V = IR).

NOTE: you could use P = I^2 * R but usually we measure voltage and current so it's easier to use use P = IV


  "But then what is the point of multiplying I and V in P = IV.


Consider a circuit with a battery and a single 1k resistor: 

The current is the same everywhere in the circuit, but the voltage drop across the wire connecting either end of the battery is much lower than the voltage drop across the 1k resistor - and thus dissipates less power, using P=IV we can calculate how much power was dissipated by a given circuit element. 

A useful application is in working out how hot an LDO regulator will get. If i regulate from 5V to 3.3V and need to draw 1 amp in total, I know that the regulation will drop 5-3.3V = 1.7V across the resistor in the IC which will produce P = 1.7V * 1A  => 1.7 watt of power. These parts will then have a degree per watt value in the data sheet so I know exactly how hot the part will get - which is a pretty important thing to know... Notice I didn't know the exact resistance inside the IC..