Total Utility:
It is total psychological satisfaction which consumer derives from the
consumption of commodity is known as total utility.
Marginal Utility:
It is and addition made in total utility by consuming and additional unit of
commodity is known as marginal utility.
Relationship between total utility and
marginal utility:
Utility
Schedule
|
Units of Apples
|
Margin Utility
|
Total Utility
|
|
1
|
10
|
10
|
|
2
|
8
|
18
|
|
3
|
4
|
22
|
|
4
|
0
|
22
|
|
5
|
-2
|
20
|
|
6
|
-4
|
16
|
(i) When marginal utility (MU) is positive, total
utility (TU) increase.
(ii) When marginal utility (MU) is zero, total
utility (TU) is at maximum.
(iii)When marginal utility (MU) is negative, total
utility (TU) decrease.
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