Economics · Ch 2 — Consumption Analysis
Cardinal Utility Approach — Total Utility and Marginal Utility
Cardinal Utility Approach — Total Utility and Marginal Utility
The Cardinal Utility Approach, associated with Alfred Marshall, assumes that the satisfaction a person gets from consuming a good — its utility — can be measured precisely in numerical units, called utils, exactly as length is measured in metres or weight in kilograms.
Total Utility (TU) is the sum total of satisfaction a consumer derives from consuming all units of a good put together. Marginal Utility (MU) is the ADDITIONAL utility gained from consuming ONE more unit of the good, over and above what was already obtained from the units consumed so far:
TU and MU are tightly linked, as the schedule below (a consumer eating successive pieces of a snack) shows:
| Units consumed | Total Utility (TU) | Marginal Utility (MU) |
|---|---|---|
| 1 | 12 | 12 |
| 2 | 22 | 10 |
| 3 | 30 | 8 |
| 4 | 36 | 6 |
| 5 | 40 | 4 |
| 6 | 40 | 0 |
| 7 | 36 | -4 |
The want-satisfying power of a good — the satisfaction a consumer derives from …
The sum total of satisfaction obtained by a consumer from consuming all units of a …
The additional utility gained from consuming one more unit of a good, i.e. MU_n = T …