Question

cocepts of tu and mu

Answer 1

Definition and Explanation:

 

"Total utility is the total satisfaction obtained from all units of a particular commodity consumed over a period of time".

 

For example, a person consumes eggs and gains 50 utils of total utility. This total utility is the sum of utilities from the successive units (30 utils from the first egg, 15 utils from the second and 5 utils from the third egg).

 

Summing up total utility is the amount of satisfaction (utility) obtained from consuming a particular quantity of a good or service within a given time period. It is the sum of marginal utilities of each successive unit of consumption.

 

Formula: TUx = ∑MUx

 

Marginal Utility (MU): Definition and Explanation:

 

"Marginal utility means an additional or incremental utility. Marginal utility is the change in the total utility that results from unit one unit change in consumption of the commodity within a given period of time".

 

For example, when a person increases the consumption of eggs from one egg to two eggs, the total utility increases from 30 utils to 45 utils. The marginal utility here would be the15 utils of the 2nd egg consumed.

 

Marginal utility, thus, can also be described as difference between total utility derived from one level of consumption and total utility derived from another level of consumption.