Relationship between Total and Marginal utility

 This table explains the relationship between Total Utility and Marginal Utility.

  

Quantity (Units)	Total Utility	Marginal Utility
0	0	-
1	8	8-0=8
2	14	14-8=6
3	18	18-14=4
4	20	20-18=2
5	20	20-20=0
6	18	18-20=-2

1. As more and more units of a commodity are consumed, marginal utility derived from each successive unit tends to diminish. It may even become zero or negative.
2. So long as Mu is positive, TU increases.
3. TU is maximum when MU=0.
4. TU starts decreasing when MU is negative.
5. Decreasing MU implies that TU increases at a decreasing rate.

• Thus, 8 utils of MU are added to TU when one unit is consumed, 6 utils of MU are added to TU when 2 units are consumed, and so on. 
• Each successive unit of consumption adds increasing less utils to TU.
• Implying that TU increases at a decreasing rate when MU is decreasing.

Diagrammatic Presentation of Relationship between Total Utility and Marginal Utility 

 

• TU continuous to rise so long as MU is positive. It happens upto 5 units of consumption.
• TU reaches its peak when MU=0. It happens when exactly 5 units of the commodity are consumed.
• TU starts declining when MU is negative. It happens after 5 units of consumption.
• Decreasing MU implies that TU increasing at a decreasing rate.