53 total
By the end of these notes, you should be able to:
Utility is the measure of the happiness, pleasure, or satisfaction that a person gets from consuming (using or eating) a good or service. Think of it as a "satisfaction score."
Economists assume that satisfaction can be measured in units — sometimes called utils (units of utility). Just like you can count the number of slices of pizza you eat, you can (in theory) count how many units of satisfaction you got from eating them.
Total utility (TU) is the overall satisfaction you get from consuming all the units of a good over a period of time.
In simple terms: Add up all the satisfaction from every single unit you consumed — that's your total utility.
Example: Suppose you eat slices of pizza one by one. The table below shows how much satisfaction (utility) each slice gives you:
| Slices of Pizza Consumed | Utility from Each Slice | Total Utility |
|---|---|---|
| 1 | 20 | 20 |
| 2 | 13 | 33 |
| 3 | 9 | 42 |
| 4 | 6 | 48 |
| 5 | 4 | 52 |
| 6 | 3 | 55 |
| 7 | 2 | 57 |
Notice: Total utility keeps increasing as you eat more slices — but it increases by smaller and smaller amounts each time.
Marginal utility (MU) is the extra satisfaction you get from consuming one more unit of a good.
In simple terms: How much extra happiness does the very next unit give you?
Formula:
Marginal Utility = Change in Total Utility ÷ Change in Quantity
Or more simply: MU = New Total Utility − Previous Total Utility
Example:
Sign in to view full notes