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Wize University Microeconomics Textbook > Theory of Consumer Choice

Total and Marginal Utility

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Marginal Utility

Marginal utility is the additional utility from consuming one extra unit. The law of diminishing marginal utitlity tells us that as we consume more units of a good our marginal utility will always fall.

Marginal Utility= ∆ Total Utility∆Q\boxed{\text{Marginal\ Utility} =\ \frac{∆\ Total\ Utility}{∆Q}}

Q Total Utility Marginal Utility
0 0 -
1 100
100
2 140
40
3 150
10
4 150
0
5 145
-5


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  • In the diagrams above, we can see that at a quantity of 1, 2 and 3 units the total utility is
    increasing
    and the marginal utility is
    positive
    .
  • At an output of 5 the total utility is
    decreasing
    and the marginal utility is
    negative
    .
  • At an output of 4 the total utility is at its
    maximum
    and the marginal utility is
    zero
    .


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Example: Total and Marginal Utility


Total utility...
A) decreases when marginal utility decreases
B) is negative when marginal utility decreases
C) diminishes as marginal utility decreases
D) is decreasing when marginal utility is negative E) is always lower than marginal utility
D.
When MU is negative (that means you've had way too many milkshakes and you got sick!), then increasing consumption actually leads to less total utility.
Extra Practice
Total utility
Marginal utility
Referring to the diagram above what is the marginal utility of the 2nd good?
If total utility from the consumption of some product is decreasing as more units are consumed, then marginal
utility must be
Total Utility
In economics, the term ʺ utilityʺ is defined as the
Diane's favorite drink is chocolate milk. The first carton of chocolate milk she drinks gives her 15 units of utility, the second carton gives her 7 units of utility. If Diane has two cartons of chocolate milk how many units of utility does she receive?
Which of the following is true about marginal utility and total utility
Practice: Marginal Utility 1
Jim gets utility of 5 by texting his girlfriend once. His utility increases to 8 if he texts her a second time.
His marginal utility is________