Economics

Meaning of Total utility and marginal Utility and the relationship between Total Utility and Marginal Utility

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In this article we will discuss about Meaning of Total utility and marginal Utility and the relationship between Total Utility and Marginal Utility.


Also Read : Concept of Utility, Total Utility and Marginal Utility

TOTAL UTILITY

Total utility (TU) means total satisfaction obtained from the consumption of all possible units of a commodity. It includes total satisfaction which consumer gets from consumption of all goods and services.

For eg. :  If a person consumes one unit and get satisfaction of 10 units and when consumes second unit and gets satisfaction of 8 units and the total satisfaction which consumer gets is 10 + 8 = 18, the total utility is 18. So, total utility is the overall satisfaction which consumer gets after consumption of goods and services.

 MARGINAL UTILITY

Marginal utility refers to additional utility derived from the consumption of one more unit from given commodity.

According to the Chapman, “Marginal utility is addition made to total utility by consuming one more unit of a commodity”.

Marginal utility means when consumer consumes additional unit 4 and get utility of 15, it is an additional utility it is known as Marginal utility.

MUn = TUn – TUn-1

 

Table of estimated TU and MU

Consumption of    Commodity X (Units)  

                 TUx

 

            MUx

              1

2

3

4

5

                 100

190

270

340

400

100 – 0 = 100

190 – 100 = 90

270 – 190 = 80

340 – 270 = 70

400 – 340 = 60

 

MUn = TUn – Tun-1

TU = 100+90+80+70+60

= 400

Meaning of Total utility and marginal Utility and the relationship between Total Utility and Marginal Utility

Meaning of Total utility and marginal Utility and the relationship between Total Utility and Marginal Utility

Relationship between Total utility and Marginal utility

 

Quantity (units)  Total Utility Marginal Utility
             0

1

2

3

4

5

 

              0

6

10

12

12

10

 

                –

6 – 0 = 6

10 – 6 = 4

12 – 10 = 2

12 – 12 = 0

10 – 12 = -2

Relationship between Total Utility and Marginal Utility

(1). When more and more units are consumed of a commodity, Marginal utility derived from each unit tends to diminish. It may be zero or negative.

(2). When MU is positive, TU increases

(3). TU is maximum when MU = 0

(4). When TU starts decreasing then MU is negative.

So we will discuss Meaning of Total utility and marginal Utility and the relationship between Total Utility and Marginal Utility. For any query comment below.

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