Utility:
In economics, utility is a measure of relative satisfaction. Utility is a
scientific construct that economics use to understand how relational consumers
divide their limited resources among the commodities that provide them with
satisfaction.
The graphical representation of a utility; schedule
in the utility curve. Normally a utility curve has total utility or marginal
utility on the vertical or y axis and quantity utility on the horizontal or
x-axis.
|
Quantity of a
good consumed
|
Total utility
|
Marginal utility
|
|
0
|
0
|
0
|
|
1
|
4
|
4
|
|
2
|
7
|
3
|
|
3
|
9
|
2
|
|
4
|
11
|
1
|
|
5
|
11
|
0
|
The fact that, the total utility increase at a decreasing
rate is shown in (b) by the declining steps of marginal utility. If we make our
units Total utility in (a) rises with consumption, but it rises at a decreasing
rate, if we make our units smaller, the steps in total utility are smoothed out
and total utility becomes the smooth curve in (a).
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