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How is MU derived from TU?
Verified Answer
How is MU derived from TU?
"Total utility is the total satisfaction obtained from all units of a particular commodity consumed over a period of time".
For example, a person consumes eggs and gains 50 utils of total utility. This total utility is the sum of utilities from the successive units (30 utils from the first egg, 15 utils from the second and 5 utils from the third egg).
Summing up total utility is the amount of satisfaction (utility) obtained from consuming a particular quantity of a good or service within a given time period. It is the sum of marginal utilities of each successive unit of consumption.
Formula:
TUx = ∑MUx
Marginal Utility (MU):
Definition and Explanation
"Marginal utility means an additional or incremental utility. Marginal utility is the change in the total utility that results from unit one unit change in consumption of the commodity within a given period of time".
For example, when a person increases the consumption of eggs from one egg to two eggs, the total utility increases from 30 utils to 45 utils. The marginal utility here would be the15 utils of the 2nd egg consumed
Marginal utility, thus, can also be described as difference between total utility derived from one level of consumption and total utility derived from another level ∆Q
This question is part of UPSC exam. View all Commerce courses
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How is MU derived from TU?
How is MU derived from TU?
Total Utility (TU) represents the total satisfaction or benefit derived from consuming a certain quantity of a good or service. Marginal Utility (MU), on the other hand, refers to the additional satisfaction gained by consuming one additional unit of a good or service. MU can be derived from TU by analyzing the changes in satisfaction as the quantity consumed increases.
1. Understanding Total Utility (TU)
Total Utility (TU) is the sum of the marginal utilities derived from consuming each unit of a good or service. It captures the overall satisfaction obtained from the total quantity consumed. TU increases as more units are consumed, but at a decreasing rate.
2. Calculating Marginal Utility (MU)
Marginal Utility (MU) can be calculated by analyzing the change in TU when an additional unit of a good or service is consumed. It represents the additional satisfaction gained from consuming that extra unit.
3. Deriving MU from TU
To derive MU from TU, we can follow these steps:
a. Calculate TU for different quantities
First, we need to determine the TU for different quantities of the good or service consumed. This involves adding up the satisfaction gained from each unit consumed.
b. Determine the change in TU
Next, we compare the TU for consecutive quantities. By subtracting the TU of the previous quantity from the TU of the current quantity, we can determine the change in satisfaction.
c. Calculate MU
To obtain the MU, we divide the change in TU by the change in quantity. This gives us the additional satisfaction gained by consuming one extra unit.
4. Example
Let's consider an example to illustrate the derivation of MU from TU. Suppose a person consumes slices of pizza and experiences the following TU:
- 1 slice: TU = 20
- 2 slices: TU = 35
- 3 slices: TU = 45
To derive MU, we calculate the change in TU for each additional slice:
- Change in TU from 1 to 2 slices = 35 - 20 = 15
- Change in TU from 2 to 3 slices = 45 - 35 = 10
Finally, we calculate the MU by dividing the change in TU by the change in quantity:
- MU from 1 to 2 slices = 15 / 1 = 15
- MU from 2 to 3 slices = 10 / 1 = 10
Therefore, the MU of consuming an additional slice of pizza is 15 and 10 for the given quantities.
In conclusion, MU can be derived from TU by analyzing the changes in satisfaction as the quantity consumed increases. Calculating the change in TU and dividing it by the change in quantity allows us to determine the additional satisfaction gained from consuming one extra unit.
Total Utility (TU) represents the total satisfaction or benefit derived from consuming a certain quantity of a good or service. Marginal Utility (MU), on the other hand, refers to the additional satisfaction gained by consuming one additional unit of a good or service. MU can be derived from TU by analyzing the changes in satisfaction as the quantity consumed increases.
1. Understanding Total Utility (TU)
Total Utility (TU) is the sum of the marginal utilities derived from consuming each unit of a good or service. It captures the overall satisfaction obtained from the total quantity consumed. TU increases as more units are consumed, but at a decreasing rate.
2. Calculating Marginal Utility (MU)
Marginal Utility (MU) can be calculated by analyzing the change in TU when an additional unit of a good or service is consumed. It represents the additional satisfaction gained from consuming that extra unit.
3. Deriving MU from TU
To derive MU from TU, we can follow these steps:
a. Calculate TU for different quantities
First, we need to determine the TU for different quantities of the good or service consumed. This involves adding up the satisfaction gained from each unit consumed.
b. Determine the change in TU
Next, we compare the TU for consecutive quantities. By subtracting the TU of the previous quantity from the TU of the current quantity, we can determine the change in satisfaction.
c. Calculate MU
To obtain the MU, we divide the change in TU by the change in quantity. This gives us the additional satisfaction gained by consuming one extra unit.
4. Example
Let's consider an example to illustrate the derivation of MU from TU. Suppose a person consumes slices of pizza and experiences the following TU:
- 1 slice: TU = 20
- 2 slices: TU = 35
- 3 slices: TU = 45
To derive MU, we calculate the change in TU for each additional slice:
- Change in TU from 1 to 2 slices = 35 - 20 = 15
- Change in TU from 2 to 3 slices = 45 - 35 = 10
Finally, we calculate the MU by dividing the change in TU by the change in quantity:
- MU from 1 to 2 slices = 15 / 1 = 15
- MU from 2 to 3 slices = 10 / 1 = 10
Therefore, the MU of consuming an additional slice of pizza is 15 and 10 for the given quantities.
In conclusion, MU can be derived from TU by analyzing the changes in satisfaction as the quantity consumed increases. Calculating the change in TU and dividing it by the change in quantity allows us to determine the additional satisfaction gained from consuming one extra unit.
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How is MU derived from TU?
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How is MU derived from TU? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about How is MU derived from TU? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for How is MU derived from TU?.
How is MU derived from TU? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about How is MU derived from TU? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for How is MU derived from TU?.
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