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Question
Explain the various points of relationship between marginal utility and total utility with the help of schedule and diagram.
Diagram
Explain
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Solution
Total Utility (TU) is the total satisfaction obtained from consuming all units of a commodity.
Marginal Utility (MU) is the additional satisfaction obtained from consuming one more unit of a commodity.
\[ MU_n=TU_n-TU_{n-1} \]
Utility Schedule
|
Units Consumed |
TU |
MU |
| 0 | 0 | – |
| 1 | 10 | 10 |
| 2 | 18 | 8 |
| 3 | 24 | 6 |
| 4 | 28 | 4 |
| 5 | 28 | 0 |
| 6 | 26 | -2 |
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