Microeconomics
Microeconomics
13th Edition
ISBN: 9781337671590
Author: Arnold
Publisher: Cengage
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Chapter 7, Problem 1QP
To determine

Explain the relation between the total utility and the marginal utility.

Expert Solution & Answer
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Explanation of Solution

The total utility is the overall satisfaction accrued by a consumer from all the units of a commodity, whereas the marginal utility is the additional utility accrued from consuming an additional unit. Therefore, as total utility increases, the marginal utility will decline. For example, Person E accrued $2 of utility from eating one banana and $1 of utility from eating the second banana. Hence, as the quantity increases from 1 banana to 2 bananas, the total utility increases from $2 to $3 (2+1), where the marginal utility is $1 (3-2). Hence, as the total utility rises, the marginal utility declines.

Economics Concept Introduction

Total utility: The total utility is defined as the overall satisfaction that a consumer derives from consuming all units of a good or service over a given time period.

Marginal utility: Marginal utility is the additional utility derived from consuming one more unit of a good or service.

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