Maharashtra BoardEnglish MediumSTD 12 Commerce / ArtsEconomicsUtility Analysis8 Marks
Question
Explain the various concepts of Utility.
✓
Answer
There are two main concepts of utility:
Marginal Utility (MU)
Total Utility (TU)
They are explained as follows:1. Marginal Utility (MU) : MU refers to the additional utility derived by a consumer from the last unit of a commodity consumed. In simple words, MU is the addition made by one more unit of a commodity consumed.
2. Total Utility (TU) : TU means the sum of utilities derived by a consumer from all units of commodity consumed. It is an aggregate of utilities derived from all units.
Symbolically, it can be represented as follows:
$MU =$ Marginal Utility
TU Total Utility
$MU _1, MU _2, MU _3$, Marginal Utilities
derived from each unit.
$M U_n=$ Marginal utility of $n$th unit.
$M U_n=T U_n-T U(n-1)$
$T U_n=$ Total utility of $n$th unit.
$T U(n-1)=$ Total utility of $n$th previous unit.
$T U_n=\Sigma M U_n$ or
$TU _{ n }= MU _1+ MU _2+$ $\qquad$ $+ MU _{ n }$
TU of nth unit = Summation of marginal utilities up to nth unit.
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