Concepts of Utility
Concepts of Utility :
Following are the two main concepts of utility :
- Total Utility (TU) : Total utility refers to the aggregate of utility derived by the consumer from all units of a commodity consumed. It is an aggregate of utilities from all successive units of a commodity consumed.
Marginal Utility (MU) : Marginal utility refers to the additional utility derived by a consumer from an additional unit of a commodity consumed. In other words, it is the addition made by the last unit of a commodity consumed.
Relationship between Total Utility and Marginal Utility :
Marginal utility derived from various units of a commodity and its total utility are interrelated. This can be easily followed from the hypothetical example given below.
Units of x
Above table explains the relationship between total utility and marginal utility.