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Average Utility

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Average Utility (A.U):

Average utility is the per unit utility of commodities consumed. When Total Utility is divided by the number of units consumed, then we get Average Utility. It is also known as the mean utility obtained from the commodities that are consumed at a particular period of time.

For example, if the Total Utility derived from the consumption of 5 units of commodities is 40, then  the average utility is 40/5 = 8 Utils.

Symbolically;

A.U = T.U / n

Where;
A.U = Average Utility
T.U = Total Utility
n = Number of Units Consumed

The concept of Average Utility can be made clear by the help of following Schedule and diagram:
Units of orange
Total utility
Average Utility
1
8
8
2
14
7
3
18
6
4
20
5
5
20
4
6
18
3

average-utility-diagram


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