Answer the following question.
Discuss briefly, using a hypothetical schedule, the relation between marginal utility and total utility.
Total Utility refers to the aggregate utility or summation of utility derived from the consumption of all the units of a commodity. Algebraically,
TU = TU1 + TU2 + TU3 + ...............+ TUn
The given is the schedule which shows the relationship between total utility and marginal utility.
|Number of Units Consumed of Commodity X||Total Utility
|Marginal Utility (MU)
MUn = TUn – TUn – 1
|1||50||50 – 0 = 50|
|2||100||100 – 50 = 50|
|3||130||130 – 100 = 30|
|4||150||150 – 130 = 20|
|5||160||160 – 150 = 10|
|6||160||160 – 160 = 0|
|7||150||150 – 160 = – 10|
- As more and more units of the commodity are consumed, the Marginal Utility derived from the consumption of each additional unit of the commodity tends to fall. With the consumption of the successive units, the Marginal Utility becomes zero and consequently becomes negative. (As per the schedule, MU is zero at the consumption of 6th unit and becomes negative at 7th unit consumed).
- As long as MU derived from the consumption of additional units of the commodity is positive, TU continues to rise. (MU is positive till the consumption of the 5th unit of the commodity.)
- When TU becomes maximum (also known as Saturation Point), MU becomes zero. (TU is maximum at 160 utils and MU is zero at the 6th unit.)
- When TU starts falling, MU becomes negative. (For the consumption of 7th unit, MU becomes negative and accordingly, the TU falls from 160 utils to 150 utils).