Total Utility: It is total amount of satisfaction that a consumer derives from all the units of commodities or service.
Marginal Utility: It is the utility derived by the consumer from consuming the additional units i.e., more than one unit of a commodity.
Example: Let us assume the following data is a measure of satisfaction (in terms of utils) derived from mobile usage from 1 to 7 hours continuously. Then the Total utility & marginal utility are as follows.
Then following depicts the above data in the form of curves, where X-axis represents no. of hours of mobile usage & Y-axis represents the utils from consumption.
The above data represents the relationship between total quantity(hours) consumed or used, total utility & marginal utility.
observations:
Marginal Utility: It is the utility derived by the consumer from consuming the additional units i.e., more than one unit of a commodity.
Example: Let us assume the following data is a measure of satisfaction (in terms of utils) derived from mobile usage from 1 to 7 hours continuously. Then the Total utility & marginal utility are as follows.
Then following depicts the above data in the form of curves, where X-axis represents no. of hours of mobile usage & Y-axis represents the utils from consumption.
The above data represents the relationship between total quantity(hours) consumed or used, total utility & marginal utility.
observations:
- when marginal utility is zero, total utility will be maximum.
- when marginal utility falls, total utility increase at diminishing rate.
- when marginal utility is negative, total utility decreases.
No comments:
Post a Comment