1. What is Marginal Utility?

Marginal Utility (MU) is the additional satisfaction or benefit a consumer derives from consuming one more unit of a good or service. It's a fundamental concept in microeconomics that helps explain consumer choice behavior.

2. How Does the Calculator Work?

The calculator uses the Marginal Utility equation:

Where:

• \( TU_2 \) — Total Utility at quantity 2
• \( TU_1 \) — Total Utility at quantity 1
• \( Q_2 \) — Quantity 2
• \( Q_1 \) — Quantity 1

Explanation: The equation calculates the change in total utility divided by the change in quantity consumed.

3. Importance of Marginal Utility

Details: Understanding marginal utility helps businesses set prices, economists analyze consumer behavior, and individuals make optimal consumption decisions. It explains the law of diminishing marginal utility.

4. Using the Calculator

Tips: Enter the total utility values at two different quantity levels. Ensure Q₂ is greater than Q₁ to avoid division by zero. All values must be valid numbers.

5. Frequently Asked Questions (FAQ)

Q1: What does negative marginal utility mean?
A: Negative MU means consuming more units actually decreases total satisfaction, which typically happens after a certain consumption point.

Q2: How is this different from average utility?
A: Average utility is total utility divided by total quantity, while marginal utility focuses on the change from the last unit consumed.

Q3: What's the law of diminishing marginal utility?
A: It states that as consumption increases, the marginal utility from each additional unit tends to decrease.

Q4: Can marginal utility be zero?
A: Yes, when consuming more of a good provides no additional satisfaction, MU becomes zero (saturation point).

Q5: How is this used in pricing decisions?
A: Businesses consider MU when setting prices, as consumers will pay up to the point where price equals marginal utility.