Concept of Utility and Total Utility and Marginal Utility

Concept of Utility

In Economics, the term ‘utility’ refers to the quality of a commodity by virtue of which it satisfies our wants.
In other words, wants satisfying power of a good is called utility.
Utility is defined as the power of a commodity or service to satisfy a human want.
Economists have leveled the term satisfaction as utility.
It is a subjective concept and therefore varies from person to person.
As already stated, it resides in one’s mind and therefore cannot be measured in quantitative terms.
Though utility and satisfaction are used synonymously, we should note that utility is the expected satisfaction whereas satisfaction implies ‘realized satisfaction’.
This is assumed to be measured in terms of cardinal numbers, such as 1,2,3,4 etc.
These numbers are called utils or units of utility.
Thus, 4 utils of utility are greater than 3 utils of utility, 3 utils of utility are greater than 2 utils of utility and so on.
There is no standard yardstick of a ‘util’ or unit of utility.
It is something that a consumer is expected to define himself while he is buying a commodity for his personal consumption.

It is the sum total of utility derived from consumption of all the units of commodity.
It is the amount of utility (satisfaction); a consumer gets by consuming all the units of a commodity.
If there are n units of the commodity then the total utility is the sum of the utilities of all n units of the commodity. Thus, if there are four units of a commodity, then total utility is, U =U1(n1) + U2(n2) + U3(n3) + U4(n4) ;Where U = total utility; U1.......U4 are the utilities of n1.....n4 units of the commodity.
Thus, if by consuming first apple, a consumer gets 12 utils of satisfaction, 10 utils from the second apple, 9 utils from the third and 7 utils from the fourth apple; then his total utility is, U = 12 + 10 + 9 + 7 = 38.
Thus utilities of various goods are additive. This means that utilities of different commodities are independent of one another. The utility derived from one commodity does not affect that of another.
If we illustrate, if 2 units of a commodity are consumed and 1st unit yields satisfaction of 10 utils, while the 2nd unit yields satisfaction of 9 utils, then total utility = 10 utils + 9 utils= 19 utils or 19 units of utility.

Marginal utility is defined as the change in the total utility due to a unit change in the consumption of a commodity per unit of time.
It can also be defined as the addition made to the total utility by consuming an additional unit of a commodity.
For example, if the total utility of 3 cups of tea is 18 utils and on consuming the 4th cup it rises to 20; then marginal utility 20-18 = 2 utils.
Thus, by consuming one more cup of tea, the additional utility, a consumer gets is 2 utils. Marginal utility can be expressed as,
$M U = \frac{∆ T U}{∆ Q}$
Where MU = marginal utility; ∆ΤU = change in total utility; ∆Q = change in the quantity consumed.
‘Utils’ is the term u8sed by Marshall as a measuring unit of utility.
The following expression can also be used to find marginal utility:
MU = TUn – TUn-1
Where, TUn is the total utility of nth unit of the commodity and TUn-1 utility from the n-1th commodity.
Thus, if TU from the second unit (nth unit) of apple is 13 and TU from the previous unit (n-1) is 7, then MU is 13 – 7 = 6.
The concept of total utility and marginal utility is shown in the utility schedule below:

When the consumer takes the 1st apple, his total utility is 7 and from the 2nd apple he gets 13 and so on.
The third column shows marginal utility, which diminishes as the consumer increases units of apples.
It is seen that when total utility is maximum, marginal utility is zero at the 8th unit of apple.
It is also seen that total utility is the sum of the marginal utilities of the 1st, 2nd, 3rd, and so on.
Thus, at 8th unit of apple,
TU = MU1 + MU2 + MU3 + MU4 +........+ MUn(8) 28 = 7 + 6 + 5 + 4 +........+ 0