Total utility is the quantity of utility deriving from consumption at a specific time of all units available to the user.
The utility of an extra or additional Unit is the marginal utility. At this moment, the buyer hesitates whether it is worth buying more or spending money on anything else, because he is in doubt. This is where the utility of the good matches its price. A table helps to clarify the relationship between total and marginal utility.
A customer purchases a good because it brings him some utility or pleasure. When a consumer at a specific time uses an increasing number of units of the same good (say cookies), the utility of the succession will decrease. There is certainly less enjoyment than the utility that the customer would obtain from the use of a good’s second unit. The utility of the third unit is lower than the second, and less than the third unit of the fourth, and so forth.
How to Calculate Total Utility and Marginal Utility
From the table, we can see that if a consumer uses the 1st biscuit he is satisfied in 20 pieces. The total utility of up to 35 units (20+15) if it consumes another biscuits. His overall happiness will be 45 times if he eats the third biscuit.
The utility that the consumer obtains from each consecutive cookie is of marginal utility. The marginal range of consumption when the customer consumes the first biscuit, and the utility derived from it will be the marginal utility. If the second is consumed, it is known as the only marginal utility and the derived utility is termed the marginal utility. In the event where seven kitchen biscuits are consumed, the seventh kit is regarded as the marginal unit and the utility it produces is understood to be a limited utility.
| Relationship between Total Utility and Marginal Utility TU AND MU | ||
| No. of biscuits | Total utility (in units) | Marginal Utility (in units) |
| 1st | 20 | 20 |
| 2nd | 35 | 15 |
| 3rd | 45 | 10 |
| 4th | 50 | 5 |
| 5th | 50 | 0 |
| 6th | 45 | -5 |
| 7th | 35 | -10 |
The table demonstrates that the marginal utility decreases to the biscuit while the total utility increases. The marginal utility is null when the total utility is greatest (at the 5th cookie). It is the satiety point for the customer; after the 5th biscuit he requires no tore. If full utility drops, marginal utility (6th and 7th biscuit) is negative; these biscuits are disadvantageous or unhappy for the consumer. A graphic can also explain the relationship between full utility and marginal utility. For this aim, the diagram was drawn. TU is the full utility curve in the diagram, and MU is the marginal utility curve. As the TU curve increases, the MU curve decreases. The curve MU touches the X-axis where the utility is 0, when the TU curve reaches its highest point. The MU turns negative when the TU starts decreasing from its peak point.