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Concept of marginal utility

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Concept of marginal utility

Concept of Marginal Utility (MU):

Marginal utility is the change in total utility by the consumption of an additional unit of a commodity. In other words, marginal utility is the addition to the total utility derived from the consumption of one additional unit. It is also called additional utility.

According to Prof. K.E. Boulding ”The marginal utility of any quantity of a commodity is the increase in total utility which results from a unit increase in its consumption.
For example, once a client consumes one orange, he gets a total utility of eight utils. By intense second orange, total utility becomes fourteen (8 + 6). Thus the utility of the second orange is 14-8=6 utils.

Symbolically ;

MU = TUn - TUn-1
0r, MU = 🔺TU/ 🔺n

Where;
TUn = nth Total Utility
TUn-1 = (n-1)th Total Utility

🔺TU = Change in Total Utility
🔺n = Change in number of units

It can be made clear by the help of following schedule and diagram:

Units of orange
Total utility
Marginal Utility
1
8
8
2
14
6
3
18
4
4
20
2
5
20
0
6
18
-2

Marginal-utility-diagram

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