Total utility is the sum of all utilities derived by a consumer form all
units of commodity consumed by him. Whereas Marginal utility is the addition to
the total utility derived by consuming an extra or additional unit of a
commodity. In other words, marginal utility derived from the consumption of an
additional or extra unit of a commodity.
The following illustration of a schedule and a diagram explain the
relationship between total utility and Marginal utility. Let us assume that an
individual consumer Mr. ‘X’ found of mangoes and start consuming unit of
mangoes in quick successive unit of mangoes.
|
Units of mangoes
|
Total Utility (T.U)
|
Marginal Utility(M.U)
|
|
1
2
3
4
5
6
7
|
10
18
24
28
30
30
28
|
10
8
6
4
2
0
-2
|
DIAGRAM
With the help of the Schedule and Diagram we
derives the following three conclusion
1.
Mu goes on diminishing as
the consumer consumes more and more units of a commodity. And TU increases but,
at a diminishing rate.
2.
There is an inverse
relationship between MU and stock of the commodity i.e. as the stock of the
commodity consumed increases, MU goes on diminishing.
3.
When MU is Zero, TU is the
maximum and it is the point of maximum satisfaction. i.e., point of satiety.
When Mu
becomes negative, total utility starts diminishing. This is the area of
dissatisfaction.
