Page 33 - DECO401_MICROECONOMIC_THEORY_ENGLISH

Microeconomic Theory

Notes
How Total Utility is different from Marginal Utility?

Total Utility is the aggregation of utilities obtained from the consumption of two different units of a commodity. While
the marginal utility is the gain from an increase in the consumption of that goods or service.

TU = S MU

MU nth = TU - TU n-1
n

Marginal utility is the change in total utility by the consumption of an additional unit of
commodity.

3.3 Difference and Relation between Total Utility and Marginal Utility

A neo-classical economist, Jevons was the first person to highlight the relationship between Total
Utility and Marginal Utility and its differences also. Difference and Relation between Total Utility and
Marginal Utility may be explained with the help of the below Table 3.1 and Fig. 3.1.

Table 1: Relation between Total Utility and Marginal Utility
Quantity Total Utility Marginal Utility Description
1 8 8 – 0 = 8 Positive marginal Utility
2 14 14 – 8 = 6 Total Utility is increasing
3 18 18 – 14 = 4
4 20
20 – 18 = 2
5 20 20 – 20 = 0 Zero marginal Utility
Total Utility is Maximum
6 18 18 – 20 = –2 Negative Marginal Utility
Total Utility is decreasing

From the Table 1 we can see that Total utility is the sum total of the marginal utilities corresponding to
various units of a commodity consumed.
(i) TU = S MU
(Here TU = Total Utility; S = Pulse it is Summation; MU = Marginal Utility Or Total Utility = Addition
of marginal Utilities)

TU = MU + MU + MU + MU + MU + MU
6 (1st) (2nd) (3rd) (4th) (5th) (6th)
= 8 + 6 + 4 + 2 + 0 + (–2) = 18
On the flip side, Marginal Utility refers to the change in the total utility corresponding to a unit change
in the consumption of a commodity.
DTU

(ii) MU = _____ or MU nth = TU – TU n–1

DQ
n
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