Explain the relationship between TU and MU
Dear student
"Total utility is the total satisfaction obtained from all units of a particular commodity consumed over a period of time".
"Marginal utility means an additional or incremental utility. Marginal utility is the change in the total utility that results from change in consumption of the commodity within a given period of time"
i) The total utility curves starts at the origin as zero consumption of apples yield zero utility.
(ii) The TU curve reaches at its maximum or a peak of M when MU is zero.
(iii) The MU curve falls through the graph. A special point occurs when the consumer consumes fifth apple. He gains no marginal utility from it. After this point, marginal utility becomes negative.
(iv) The MU curve can be derived from the total utility curve. It is the slope of the line joining two adjacent quantities on the curve. For example, the marginal utility of the third apple is the slope of line joining points a and b. The slope of such given by the formula:
MU = ∆TU
Regards
"Total utility is the total satisfaction obtained from all units of a particular commodity consumed over a period of time".
"Marginal utility means an additional or incremental utility. Marginal utility is the change in the total utility that results from change in consumption of the commodity within a given period of time"
i) The total utility curves starts at the origin as zero consumption of apples yield zero utility.
(ii) The TU curve reaches at its maximum or a peak of M when MU is zero.
(iii) The MU curve falls through the graph. A special point occurs when the consumer consumes fifth apple. He gains no marginal utility from it. After this point, marginal utility becomes negative.
(iv) The MU curve can be derived from the total utility curve. It is the slope of the line joining two adjacent quantities on the curve. For example, the marginal utility of the third apple is the slope of line joining points a and b. The slope of such given by the formula:
MU = ∆TU
∆Q
Regards