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Worked Examples · Example 1
Q.

From the following data on a consumer's total utility derived from successive cups of tea, calculate the marginal utility of each cup and state at which cup the point of satiety is reached.

Cups12345
Total Utility (utils)1018242420
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Marginal utility of the n-th unit is calculated as MU_n = TU_n - TU_(n-1), taking TU_0 = 0.

Cups (n)TUMU = TU_n - TU_(n-1)
11010 - 0 = 10
21818 - 10 = 8
32424 - 18 = 6
42424 - 24 = 0
52020 - 24 = -4

Marginal utility falls continuously from 10 to 8 to 6, confirming the Law of Diminishing Marginal Utility. It reaches zero at the 4th cup, which is exactly where total utility is at its maximum (24 utils) — this is the point of satiety. Beyond it, the 5th cup actually reduces total utility (from 24 to 20), so marginal utility turns negative, showing the consumer has over-consumed relative to what maximises satisfaction.

Independent verification: re-computing each difference separately — 18-10=8, 24-18=6, 24-24=0, 20-24=-4 — confirms the same marginal utility series, so the answer is verified.

✓Final answer

MU series: 10, 8, 6, 0, -4 utils. The point of satiety (MU = 0, TU at its maximum) occurs at the 4th cup.

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