{"id":3343,"date":"2021-07-02T20:24:33","date_gmt":"2021-07-02T14:54:33","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=3343"},"modified":"2025-10-07T12:31:35","modified_gmt":"2025-10-07T07:01:35","slug":"utility-in-economics-meaning-concepts","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/","title":{"rendered":"Utility in Economics &#8211; Meaning &amp; Concepts (Total Utility, Marginal Utility) | Micro Economics"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e20886b5ae2\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e20886b5ae2\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/#Utility_in_Economics\" >Utility in Economics<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/#What_is_utility_in_Economics_Meaning_of_utility_in_economics\" >What is utility in Economics? (Meaning of utility in economics)<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/#Concepts_of_Utility\" >Concepts of Utility<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/#1_Total_Utility_TU\" >1) Total Utility (TU):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/#2_Marginal_Utility_MU\" >2) Marginal Utility (MU):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/#Formula_explaining_the_relationship_between_total_utility_and_marginal_utility\" >Formula explaining the relationship between total utility and marginal utility :<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading has-text-align-center\"><span class=\"ez-toc-section\" id=\"Utility_in_Economics\"><\/span><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Utility in Economics<\/mark><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_utility_in_Economics_Meaning_of_utility_in_economics\"><\/span>What is utility in Economics?<br>(Meaning of utility in economics)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A consumer usually decides his demand for a commodity based on the utility (or satisfaction) that he derives from it.<\/p>\n\n\n\n<p><strong>What is utility?<\/strong> Utility is the capacity of a commodity to satisfy human wants. In other words, utility is the want satisfying power of a good. The more the need for a commodity or the stronger the desire to have it, the greater is the utility derived from the commodity.<\/p>\n\n\n\n<p>The utility is subjective. Different individuals can get different levels of utility from the same commodity. For example, someone who likes chocolates will get a much higher utility from chocolate than someone who is not so fond of chocolates.<\/p>\n\n\n\n<p>Also, the utility that one individual gets from the commodity can change with change in place and time. For example, utility from the use of a room heater will depend upon whether the individual is in Ladakh or Chennai (place) or whether it is summer or winter (time).<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/microeconomic-definition\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/microeconomic-definition\/\" target=\"_blank\" rel=\"noreferrer noopener\">Microeconomic Definition | Historical Review of Microeconomics<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/scope-of-microeconomics\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/scope-of-microeconomics\/\" target=\"_blank\" rel=\"noreferrer noopener\">Scope Or Nature of Microeconomics<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/exceptions-to-the-law-of-diminishing-marginal-utility\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/exceptions-to-the-law-of-diminishing-marginal-utility\/\" target=\"_blank\" rel=\"noreferrer noopener\">Exceptions of Law of Diminishing Marginal Utility<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/criticism-of-law-of-diminishing-marginal-utility\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/criticism-of-law-of-diminishing-marginal-utility\/\" target=\"_blank\" rel=\"noreferrer noopener\">Criticism of Law of Diminishing Marginal Utility<\/a><\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" width=\"1024\" height=\"576\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/utility-in-economics-1024x576.png\" alt=\"utility in economics\" class=\"wp-image-3384 lazyload\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/576;width:720px;height:auto\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/utility-in-economics-1024x576.png 1024w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/utility-in-economics-300x169.png 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/utility-in-economics-768x432.png 768w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/utility-in-economics.png 1280w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" \/><\/figure>\n\n\n\n<h4 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Concepts_of_Utility\"><\/span>Concepts of Utility<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p><strong>The following are the two main <a href=\"https:\/\/www.youtube.com\/watch?v=ZeXyYzTSGsU\" data-type=\"URL\" data-id=\"https:\/\/www.youtube.com\/watch?v=ZeXyYzTSGsU\" target=\"_blank\" rel=\"noreferrer noopener\">concepts of utility<\/a>:<\/strong><\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Total_Utility_TU\"><\/span><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-contrast-color\">1) Total Utility (TU):<\/mark><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p> Total utility refers to the aggregate of utility derived by the consumer from all units of a commodity consumed. It is an aggregate of utilities from all successive units of a commodity consumed.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Marginal_Utility_MU\"><\/span><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-contrast-color\">2) Marginal Utility (MU): <\/mark><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Marginal utility refers to the additional utility derived by a consumer from an additional unit of a commodity consumed. In other words, it is the addition made by the last unit of a commodity consumed.<\/p>\n\n\n\n<h4 class=\"wp-block-heading has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Formula_explaining_the_relationship_between_total_utility_and_marginal_utility\"><\/span>Formula explaining the relationship between total utility and marginal utility :<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>TU = TU = \u2211 MU or<br>TU = MU<sub>1<\/sub> + MU<sub>2 <\/sub>+ MU<sub>3<\/sub> \u2026\u2026\u2026\u2026\u2026. + MU<sub>n<\/sub><br>MU<sub>n<\/sub> = TU<sub>n<\/sub> &#8211; TU<sub>(n-1)<\/sub><br>Where TU = Total Utility<br>MU = Marginal Utility<br>MU<sub>1<\/sub>, MU<sub>2<\/sub>, MU<sub>3 <\/sub>= Marginal Utility of each unit.<br>MU<sub>n<\/sub> = Marginal Utility of n<sup>th<\/sup> unit.<br>TU<sub>n<\/sub> = Total Utility at n<sup>th<\/sup> level.<br>TU<sub>(n-1)<\/sub> = Total Utility at previous level.<\/p>\n\n\n\n<p><strong>Relationship between Total Utility and Marginal Utility:<\/strong><\/p>\n\n\n\n<p>Marginal utility derived from various units of a commodity and its total utility are interrelated. This can be easily followed by the hypothetical example given in the table below.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">Unit of a commodity<\/td><td class=\"has-text-align-center\" data-align=\"center\">TU Units<\/td><td class=\"has-text-align-center\" data-align=\"center\">MU Units<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">1<\/td><td class=\"has-text-align-center\" data-align=\"center\">10<\/td><td class=\"has-text-align-center\" data-align=\"center\">10<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">2<\/td><td class=\"has-text-align-center\" data-align=\"center\">18<\/td><td class=\"has-text-align-center\" data-align=\"center\">8<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">3<\/td><td class=\"has-text-align-center\" data-align=\"center\">24<\/td><td class=\"has-text-align-center\" data-align=\"center\">6<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">4<\/td><td class=\"has-text-align-center\" data-align=\"center\">28<\/td><td class=\"has-text-align-center\" data-align=\"center\">4<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">5<\/td><td class=\"has-text-align-center\" data-align=\"center\">30<\/td><td class=\"has-text-align-center\" data-align=\"center\">2<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">6<\/td><td class=\"has-text-align-center\" data-align=\"center\">30<\/td><td class=\"has-text-align-center\" data-align=\"center\">0<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">7<\/td><td class=\"has-text-align-center\" data-align=\"center\">28<\/td><td class=\"has-text-align-center\" data-align=\"center\">-2<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>The above table explains the relationship between total utility and marginal utility.<br>On the basis of the table, Total utility and Marginal Utility curves (TU and MU) can be derived with the following diagram.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" width=\"483\" height=\"291\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/image-3.png\" alt=\"\" class=\"wp-image-3372 lazyload\" style=\"--smush-placeholder-width: 483px; --smush-placeholder-aspect-ratio: 483\/291;width:507px;height:305px\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/image-3.png 483w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/07\/image-3-300x181.png 300w\" data-sizes=\"(max-width: 483px) 100vw, 483px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" \/><\/figure>\n\n\n\n<p>TU Curve = Total Utility Curve<br>MU Curve = Marginal Utility Curve<br>The X-axis measures the units of the commodity consumed while Y-axis indicates the figures of total and marginal utility. The above Figure shows that the total utility curve slopes upwards whereas the marginal utility curve slopes downwards. The marginal utility curve shows zero and negative levels of marginal utility whereas<br>total utility curve shows maximum and constant total utility level.<\/p>\n\n\n\n<p>1) Total utility and marginal utility of the very first unit of x consumed, are the same.<\/p>\n\n\n\n<p>2) As the consumer consumes further units of x, the total utility increases at a diminishing rate and marginal utility goes on diminishing. <\/p>\n\n\n\n<p>3) At a particular stage, total utility reaches its maximum and remains constant whereas marginal utility becomes zero. This is called the point of satiety. (TU highest, MU = 0)<\/p>\n\n\n\n<p>4) After this point, any additional unit consumed further results in a decline in the total utility, while marginal utility becomes negative.<\/p>\n\n\n\n<p>5) After reaching the point of satiety, a rational consumer should stop his consumption since the maximum limit of satisfaction is reached and there is no addition to total utility by any further increase in the stock<br>of a commodity.<\/p>\n\n\n\n<p>6) Consumption beyond the point of satiety transforms satisfaction into dissatisfaction. In other words, a consumer starts experiencing the ill effects of consumption.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/importance-of-law-of-diminishing-marginal-utility\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/importance-of-law-of-diminishing-marginal-utility\/\" target=\"_blank\" rel=\"noreferrer noopener\">Importance of Law of Diminishing Marginal Utility<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/\" target=\"_blank\" rel=\"noreferrer noopener\">Utility in Economics (Concepts of Utility)<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/features-of-utility\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/features-of-utility\/\" target=\"_blank\" rel=\"noreferrer noopener\">Features of Utility<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/types-of-utility\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/types-of-utility\/\" target=\"_blank\" rel=\"noreferrer noopener\">Types of Utility<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":3384,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[1736],"class_list":["post-3343","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-misc","tag-utility-in-economics"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/3343","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=3343"}],"version-history":[{"count":17,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/3343\/revisions"}],"predecessor-version":[{"id":39039,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/3343\/revisions\/39039"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/3384"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=3343"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=3343"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=3343"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}