RELATION BETWEEN MU AND TU

Consumer-A consumer is one who buys goods and services for satisfaction of wants.

Utility-Utility refers to want satisfying power of a commodity.

How to Measure Utility?

Utility can be measured in cardinal (numerical) terms. By using cardinal measure of utility. So, the economists derived and imaginary measure, known as ‘Util’.

Total Utility (TU)

Total utility refers to the total satisfaction obtained from the consumption of all possible unite of a commodity.

Marginal Utility (MU)

Marginal utility is the additional utility derived from the consumption of one more unit of the given commodity.

One More way to Calculate MU

TU and MU

Glass of water	MU	TU
1 2 3 4	20 16 10 4	20 36 46 50
5	0	50
6	-6	44

Relationship between TU and MU

1.When MU is Positive, TU increases( as from unit 1 to 4)

2. When MU is zero, TU is maximum ( as on 5^th unit)

3.When MU is Negative, TU starts declining (as on 6^th unit)