Total utility
Also called: TU · Topic: Consumer Behaviour, Demand and Elasticity · NCERT: Class 12, Ch 2 "Theory of Consumer Behaviour"
Meaning
Total utility (TU) is the total satisfaction a consumer gets from consuming a given amount of a good. TUₙ is the utility from n units, and it equals the sum of the marginal utilities of those units: TUₙ = MU₁ + MU₂ + … + MUₙ As consumption rises, TU increases at a slower and slower rate because marginal utility keeps falling. TU reaches its maximum, called satiety, when marginal utility is zero. It falls when marginal utility turns negative.
Example
In the Class 12 table, TU goes 12, 18, 22, 24, 24 and then 22 for 1 to 6 units. It peaks at 24 on the 5th unit, where MU = 0. It drops to 22 on the 6th unit, where MU = −2.
Don't confuse with
- Marginal utility: MU is the extra utility from one more unit. MU can be negative. TU is highest when MU is zero, not when MU is highest.
Related concepts
- Cardinal utility analysis
- Marginal utility
- Law of diminishing marginal utility
- Law of equi-marginal utility
- Consumer surplus
- Diamond-water paradox