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Understanding Total Utility and Marginal Utility in Microeconomics

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Understanding Total Utility and Marginal Utility in Microeconomics

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Questions and Answers

What is total utility in economics?

The maximum satisfaction gained by the consumer from the consumption of a single unit of a commodity

The average satisfaction gained by the consumer from the consumption of all available units of a commodity

The satisfaction gained by the consumer from the consumption of a specific unit of a commodity

The total satisfaction gained by the consumer from the consumption of all available units of a commodity (correct)

If a consumer obtains 8, 6, and 4 utils of utility from consuming 3 units of a particular commodity, what is the total utility?

16 utils

14 utils

18 utils (correct)

20 utils

How is total utility mathematically represented?

$TU = \frac{1}{n} \sum_{i=1}^{n} MU_i$

$TU = n \times MU_n$

$TU = \frac{1}{n} (MU_1 + MU_2 + ... + MU_n)$

$TU = \sum MU = MU_1 + MU_2 + ... + MU_n$ (correct)

If a consumer obtains 10 utils from consuming the first unit and 8 utils from consuming the second unit of a particular commodity, what is the marginal utility of the second unit?

<p>$-2$ utils</p> Signup and view all the answers

What does marginal utility represent?

<p>The additional satisfaction gained from consuming an additional unit of a commodity</p> Signup and view all the answers

Study Notes

Total Utility

Total utility is the total satisfaction or pleasure a consumer derives from consuming a certain quantity of a commodity.
It is the sum of the utilities derived from each unit of the commodity consumed.

Calculating Total Utility

If a consumer obtains 8, 6, and 4 utils of utility from consuming 3 units of a commodity, the total utility is 8 + 6 + 4 = 18 utils.

Mathematical Representation

Total utility is mathematically represented as TU, and is the sum of the utilities derived from each unit of the commodity consumed: TU = U1 + U2 + U3 + … + Un.

Marginal Utility

Marginal utility is the additional utility derived from consuming one more unit of a commodity.
If a consumer obtains 10 utils from consuming the first unit and 8 utils from consuming the second unit of a commodity, the marginal utility of the second unit is 8 utils.
Marginal utility represents the change in total utility resulting from a one-unit change in the quantity of the commodity consumed.

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Description

Explore the concept of cardinal utility, total utility, and marginal utility in microeconomics. Learn about the pleasure or satisfaction individuals derive from their economic activities and how it varies from person to person, place to place, and time to time.