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Question
Answer the following question :
Explain the relationship between ‘total utility’ and ‘marginal utility’.
Solution
The relationship between MU and TU is as :
(i) When MU is positive, TU rises.
(ii) When MU is zero, TU is maximum.
(iii) When MU is negative, TU falls. The following utility schedule and diagram illustrate the relationship :
| Units | TU | MU |
|
1 2 3 4 |
8 14 TU 18 rises 20 |
8 6 MU is + ve 4 2 |
| 5 | 20 ] TU Max. | 0] MU is zero |
| 6 | 18] TU falls | -2] MU is - ve |
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