The main difference between Total Utility and Marginal Utility is that the total utility refers to the satisfaction derived by a consumer from the consumption of a certain amount of a commodity whereas Marginal Utility refers to the additional satisfaction derived by the consumer from consumption of one more unit of a commodity.
To understand its difference, first, we have to know the meaning of both terms:
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Total Utility refers to the total satisfaction obtained from the consumption of all possible units of a commodity. For example, if consumption of one apple gives a person satisfaction of 10 units and consumption of another apple gives the satisfaction of 8 units, the total satisfaction from two apples will be (10+8) = 18 units. If one more apple gives him the satisfaction of 6 units, then total satisfaction becomes (10+8+6)=24 units.
TUn = U1+U2+U3+………..+Un
TUn = Total utility from n units of a given commodity
n = number of units consumed
U1, U2, U3 ………….Un = utility from 1st, 2nd, 3rd to an nth unit of commodity.
Marginal Utility refers to the additional utility derived from the consumption of one more unit of a given commodity in a given time period.
As in the above example, the total utility increases from 18 to 24 units after the consumption of 3rd apple. Thus, an additional 6 units are the marginal utility-driven from the 3rd unit of apple.
MU can be calculated as
MUn = TUn – TUn-1
Where MUn = marginal utility from an nth unit
TUn = Total utility from n units
TUn-1 = Total utility from n-1 units
In simple words, MU is the change in total utility when more unit of a given commodity is consumed.
“MU= Change in TU/ Change in units consumed”
Basis of Difference
|It is the aggregate satisfaction derived from the consumption of a commodity by a consumer||It is the additional satisfaction derived from consuming an extra unit of a commodity by a consumer.|
|In the beginning, it increases but at a decreasing rate.||It tends to diminish as more and more units of a commodity are consumed|
Point of Satiety
|The point of satiety arrives when it is maximum.||Point of satiety arrives where it is zero.|
|It tends to decrease after the point of saturation is reached.||It becomes negative after the point of saturation.|
|It can be calculated as the summation of marginal utilities derived from all units of a commodity||It can be calculated as the difference between the total utilities derived from two successive units of a commodity.|
|TUn = U1+U2+U3+………..+Un||MUn = TUn – TUn-1|
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Thus, Total Utility and Marginal Utility are the types of term Utility. These both are used to analyze the consumers’ preferences while purchasing in a market.
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