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Marginal Utility Formula:
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Marginal Utility (MU) is the additional satisfaction or benefit a consumer derives from consuming one more unit of a good or service. It is calculated as the change in total utility divided by the change in quantity consumed.
The calculator uses the marginal utility formula:
Where:
Explanation: The formula calculates how much additional utility is gained (or lost) when consumption changes by one unit.
Details: Understanding marginal utility is fundamental in economics as it explains consumer choice behavior, the law of diminishing marginal utility, and helps determine optimal consumption levels.
Tips: Enter the initial and final total utility values in utils, and the corresponding quantities in units. The calculator will compute the marginal utility between these two points.
Q1: What does negative marginal utility mean?
A: Negative MU means consuming an additional unit actually decreases total satisfaction, which typically happens when you consume too much of something.
Q2: What is the law of diminishing marginal utility?
A: This economic law states that as consumption increases, the marginal utility derived from each additional unit tends to decrease.
Q3: How is marginal utility used in practice?
A: Businesses use MU concepts to set prices, while consumers use it (often unconsciously) to make consumption decisions that maximize satisfaction.
Q4: What's the difference between total and marginal utility?
A: Total utility is the overall satisfaction from all units consumed, while marginal utility is only the satisfaction from the last unit consumed.
Q5: Can marginal utility be zero?
A: Yes, when consuming an additional unit provides no additional satisfaction, MU is zero (though total utility may still be positive).