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Worked Examples · Example 1
Q.

A consumer's Total Utility (TU) from successive cups of tea consumed at one sitting is given below. Derive the Marginal Utility (MU) schedule and verify whether the Law of Diminishing Marginal Utility holds.

Cups of teaTotal Utility (TU), utils
114
226
336
444
548
648
744
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✓ Free question

Marginal Utility of the nn-th unit is the addition made to Total Utility by consuming that unit: MUn=TUn−TUn−1MU_n = TU_n - TU_{n-1} (taking TU0=0TU_0 = 0).

CupsTUMU = TUₙ − TUₙ₋₁
11414 − 0 = 14
22626 − 14 = 12
33636 − 26 = 10
44444 − 36 = 8
54848 − 44 = 4
64848 − 48 = 0
74444 − 48 = −4

The MU column falls continuously — 14, 12, 10, 8, 4, 0, −4 — with no reversal at any step, so the Law of Diminishing Marginal Utility is fully confirmed by this schedule. Notice also the TU–MU link: TU keeps rising exactly as long as MU stays positive, TU is at its MAXIMUM (48) precisely at the 6th cup where MU first becomes zero, and TU actually FALLS at the 7th cup because MU has turned negative there — the consumer is now so full that an additional cup of tea makes him feel worse off, not better.

✓Final answer

MU schedule: 14, 12, 10, 8, 4, 0, −4 for cups 1–7 respectively. The Law of Diminishing Marginal Utility holds throughout; TU peaks at the 6th cup and falls thereafter.

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