Precise idea about Marginal Utility.

Before getting into “Marginal Utility” one should know what actually “Utility” mean.Utility refers the state of being useful,profitable or beneficial.According to economics it is known as the satisfaction people derive from their consumption activities.People allocate their income to maximise
their satisfaction or total utility and thats the reason why income also plays an important role in utlity of a product or commodity.Utility will directly influence the demand and price of that goods or services.The day to day example of utility are water,electricity,foods etc.

In the other hand “Marginal Utility” is the additional bit of satisfaction or amount of utility,gained from each extra unit of consumption.
Lets take an example,Tukul really loves biriyani.Each time Tukul eats a spoon of biriyani,she feels a certain amount of satisfaction.The second spoon of biriyani brings,more satisfaction than the first,and the third spoon of biriyani is more satisfying than the second.However by the time Tukul eats the last spoon of biriyani,the amount of satisfaction is much less than the first few intakes.

By the above example we come to know about the principle of Diminishing marginal utility.It states that the more of a good that one obtains in a specific period of time,the less the additional utility derived from an additional unit of the good.Utility diminishes overtime the shorter the time period,the more quickly marginal utility diminishes.As consumers are not same the marginal utility diminishes depends on individual tastes and preferences.The total amount of satisfaction or benefit gained from the consumption of each good or service is the total utility.

Marginal Utility formula=Change in Total Utility/Change in number of units consumed
.
Lets look back at Tukul and her biriyani,the total utility decreases by the time the last spoon of biriyani is consumed as Tukul starts to feel full.This change in total utility as each spoon of biriyani is called its Marginal utility.