Relation between total utility and marginal utility

1] TU of a good or service refers to the total satisfaction derived by the consumer from the consumption of it.

Marginal utility refers to the addition to the total utility by the consumption of every additional unit of the commodity

2] It means the sum total of utilities derived from all units of a commodity consumed at a time.

It shows the utility of the last unit consumed at a point of time

3]As consumption rises,

a).TU rises at a diminishing rate and M U diminishes

b) TU is maximum when MU = 0.

c) When TU decreases MU is negative.

4]. TU = Sum of MU of all units consumed.   i.e. TUa = MU1 + MU2 + ….. + MUn

MU = difference between any two successive TU.   i.e. MU(n) = TU(n) –   TU(n-1).

6] TU shows the rate at which the MU diminishes..   MU shows the rate at which the TU rises.

7] At a later stage – Though T U decreases it remains positive. but M U  becomes negative..

8]. TU = value in use and MU = value-in exchange in value of the commodity

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