Total Utility and Marginal Utility

Once utility is accepted as (approximately) measurable in utils, the Std XII Economics syllabus introduces two closely related but distinct measures of it: Total Utility and Marginal Utility.

Total Utility (TU) is the sum total of satisfaction that a consumer derives from consuming a given quantity of a good in a given period of time. If a consumer eats four mangoes and each one adds to their satisfaction, the Total Utility after four mangoes is the sum of the satisfaction contributed by all four, taken together.

Marginal Utility (MU) is the additional (extra) utility that a consumer derives from consuming one more unit of a good, all other units held constant. In symbols, if $TU_n$ is the Total Utility from $n$ units and $TU_{n-1}$ is the Total Utility from $(n-1)$ units, then:

Marginal Utility can equally be written as the ratio of the change in Total Utility to the change in the quantity consumed:

The relationship between TU and MU is the single most important idea in this chapter, and it holds in every case, without exception:

• TU is the sum of the MUs of all units consumed so far — $TU_n = MU_1 + MU_2 + \dots + MU_n$. Equivalently, MU is what must be added to the previous Total Utility to get the new Total Utility.
• As long as MU is positive, TU keeps rising (though, as Section 3 shows, it typically rises at a diminishing rate).
• When MU becomes zero, TU is at its maximum — the consumer has reached the point of full satisfaction (satiety) for that good in that period, and one more unit adds nothing further. …