Relationship Between TU And MU - Economics Video Lecture - Commerce

now let's quickly understand the
relationship between the TU and mu and
we'll also see the diagrammatic
representation to understand the
relationship between the TU and mu C we
understood what are the formulas of T U
and mu all right so let's quickly see a
table here let's assume because I love
chocolates so I'm assuming I'm taking
chocolate as a commodity out here okay
so when I'm consuming one bar of
chocolate let's say I like the rimmel so
if I can do one Dairy Milk I'll get a
marginal utility of ten
okay so because it is the first unit so
here what would happen the total utility
would be also ten now when I consume a
second bar of dairy milk that is I going
by second bar and and consume so what
happens here the total utility will
increase because what was the formula
for total utility I had given to you it
was sum of marginal utilities so here if
the marginal utility goes to eight then
my total utility increases to 80 now if
you remember we also gave you the
formula of maximal utility suppose
generally these questions would come in
exam wherein they would ask you to
either calculate marginal utility or to
calculate total utility so suppose if
you have been given 18 as the total
utility for second unit then ask the
total utility for the first unit so here
if I have to calculate the marginal
utility what was that change in the
total utility what is the change 18
minus 10 which is 8 divided by 2 minus 1
that is change in the quantity and that
is how we can get the marginal utility
so now you can see as I start consuming
more and more chocolates although my
total utility would start increasing it
would keep on increasing till to a
certain extent then it will start
decreasing whereas when it comes to
marginal utility what is happening
it will keep on decreasing so remember
as we start consuming more and more of a
commodity we tend to have lesser
satisfaction the utility it is providing
to us becomes lower and lower and hence
marginal utility keeps on decreasing
okay
so let's quickly now come to this
diagram see here as you can see the TU
is increasing right but then the
decrease the increase has been at a
decreasing rate how do I come to this
conclusion because if here it increased
by 8 then here again that increase was
only by 6 right further here it was 4
so what is happening to you is
increasing but it is increasing at a
very smaller amount with each additional
unit and hence we say that tu is
increasing at a decreasing rate okay now
let's come to this diagram here so if I
have to plot this marginal utility on
the axis what you can see here the line
is a downward sloping line why because
the consumption of successive units as
they were done the satisfaction became
less and less and hence from 10 it went
down to minus 2 and that is the reason
this is a negative sloping curve here
you can see it is going down as and when
the units consumed are increasing okay
now let's understand the relationship
between PU and mu in the diagrammatic
format so when tu was increasing see
from here it is increasing right as that
thing the marginal utility is
diminishing so remember the first
relation here is whenever there is a
total utility increasing that the
utility will keep on definition now when
I reach this point which was my maximum
to you what is that at unit five it was
thirty right at that time you can see
here what happened the marginal utility
is zero okay so at maximum total utility
my marginal utility would be zero now
remember here we would take this at
fixed unit because it is 30 even here so
we have to take this at the sixth unit
where the maximum utility gave me zero
marginal utility okay now let's see the
last one when the tu started decreasing
from 38 came down to 28
so here when it came down to 28 what
happened
marginal utility when to negative so
that's the relationship between total
utility and marginal utility now let's
quickly recap the relationship between
tu and mu C what is the relationship out
here mu would be the rate of change of
total utility whenever you're reading
this try to remember the table which we
saw so whatever is the rate of change of
total utility that's your marginal
utility
whenever mu decreases the tu would
increase but it will always be at a
decreasing rate because the satisfaction
of eating one more chocolate keeps on
diminishing when the mu becomes zero tu
is maximum it is the saturation point
see no matter how much I like chocolate
there would be a limit I cannot eat
beyond that limit my body will say no no
more sugar maybe I would say I'm not
really interested in eating sugar you
can truck or eating chocolate you can
try this at home whatever you like you
can just keep on eating you will realize
it after some point that saturation will
come in and your marginal utility will
become zero
okay now whenever the MU is negative
that means the tea you will start
declining from that point or it would
decline
so that's the snapshot of the
relationship between tu and mu