Difference Between Total Utility And Marginal Utility (With Chart)

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What Is Total Utility?

Total utility refers to the overall or total level of happiness or satisfaction that a consumer experiences by consuming a certain amount of a good or service. Total utility is usually measured in relative units referred to as utils. When measuring total utility, analysis can span from one unitofconsumption to multiple units. For example, a cookie provides a level of utility as determined by its singular consumption whereas a bag of cookies may provide total utility over the course of time it takes to completely consume all the cookies in the bag.  

How To Calculate Total Utility

Each individual unit of a good or service has its own utility and each additional unit of consumption will have its own marginal utility. Total utility therefore can also be explained as the summation of the marginal utilizes. It simply implies that total utility for a particular unit in the summation of the marginal utilities up to that unit, (TUN=MU1 + MU2 + MU3……MUN).

What You Need To Know About Total Utility

  1. Total utility is the aggregate or total utility that a person derives from consuming a particular good or service.
  2. In the beginning, the total utility increases but at a decreasing rate.
  3. At the point of satisfaction (satiety) total utility is maximum.
  4. The total utility begins decreasing after the point of maximum satisfaction.
  5. Total utility increases with increase in the number of units consumed.
  6. Total utility can be calculated using the following formula: (TUN=MU1 + MU2 + MU3……MUN) where, U is utility, TU is total utility and MU is marginal utility.

What Is Marginal Utility?

Marginal utility is the amount of satisfaction derived by a person from additional consumption of a particular good or service. Marginal utility always declines for each successive quantity of consumption. If you like marinated rib-eye and you eat one piece; the first piece will provide the greatest satisfaction. If you eat another piece, you will probably enjoy that one also, but the satisfaction will be less than for the first. At some point, you will not want any more marinated rib-eye. The marginal utility drop to zero and may even become negative. This explains the law of diminishing marginal utility.

Marginal utility is useful in explaining how consumers make choices to get the most benefit from their limited budgets. In general, people will continue consuming more of a good as long as the marginal utility is greater than the marginal cost.

Marginal utility can be positive, zero or negative. Positive marginal utility occurs when having more of an item brings additional happiness. Zero marginal utility occurs when consuming more of an item brings no extra measure of satisfaction whereas Negative marginal utility occurs where you have too much of an item, and therefore consuming more can actually be harmful.

How To Calculate Marginal Utility

Marginal utility can also be explained as the difference between the total utilities of the two successive units. For example marginal utility of fourth unit would be the total utility of fourth unit less the total utility of the third unit, MU= TUN-TU N-1

What You Need To Know About Marginal Utility

  1. Marginal utility is the amount of satisfaction derived by a person from additional consumption of a particular good or service.
  2. The marginal utility shows a tendency to decrease with every additional intake.
  3. At the point of satisfaction (satiety) marginal utility is zero.
  4. Marginal utility becomes negative after the satisfaction point is reached.
  5. The tendency of marginal utility is diminishing and this forms the basis for the law of diminishing marginal utility.
  6. Marginal utility can be calculated using the following formula: MU= TUN-TU N-1 ,where MU is the marginal utility whereas TU is total utility.

Difference Between Total Utility And Marginal Utility In Tabular Form

BASIS OF COMPARISON TOTAL UTILITY MARGINAL UTILITY
Description Total utility is the aggregate or total utility that a person derives from consuming a particular good or service.   Marginal utility is the amount of satisfaction derived by a person from additional consumption of a particular good or service.  
Behavior In the beginning, the total utility increases but at a decreasing rate.   The marginal utility shows a tendency to decrease with every additional intake.  
At The Point of Satisfaction At the point of satisfaction (satiety) total utility is maximum.   At the point of satisfaction (satiety) marginal utility is zero.  
Decrease Behavior The total utility begins decreasing after the point of maximum satisfaction. Marginal utility becomes negative after the satisfaction point is reached.  
Increase Behavior Total utility increases with increase in the number of units consumed. The tendency of marginal utility is diminishing and this forms the basis for the law of diminishing marginal utility.
Formula  TUN=MU1 + MU2 + MU3……MUN).   MU= TUN-TU N-1