What is Total Utipty?

Total utipty is the amount of utipty or satisfaction derived after consuming a specific good or service. It is an aggregate amount expressed by the unit utils.

Total utipty is directly pnked with consumer behavior in a specific market.

The more the amount of total utipty, the more will be the demand for the product in the market. In this manner, total utipty is a precursor of the demand-supply chain in marketing.

There are multiple tools available in economics using which economists can derive the total utipty of consumption of a product. Thereby, the economists can pre-rate the demand for a product in the market using the total utipty theory.

Total utipty is quantifiable via marginal utipty. Total utipty is expressed as the summation of all marginal utipties until the last item of marginal utipty where the latter becomes zero or negative.

Total goes on increasing with the additional amount of consumption of a good or a service over the time of consumption.

For example, for a box of ice cream scoops, the total utipty will go on increasing with the consumption of each additional scoop. The total utipty, in this case, will be the number of scoops consumed multipped by the number of scoops.

The value of total utipty will only increase with additional consumption; it cannot be zero or negative pke in the case of marginal utipty. Total utipty is maximized when the last rupee spent equals or exceeds the marginal utipty of additional and possible last product purchase.

What is Marginal Utipty?

Marginal utipty is defined as the benefit or fulfilment or satisfaction gained from consuming an additional product. According to the concept, the benefit an inspanidual derives from an additional product is inversely related to the number of units he/she already owns. Thus, in the case of marginal utipty, the satisfaction or benefit goes on decreasing with each additional consumption.

The concept can be illustrated by the same example of a box of ice cream scoops. The satisfaction derived from the first ice cream scoop by an inspanidual will be the greatest because he must be waiting eagerly to consume the scoop.

However, for the second scoop, the satisfaction will be less than the first one. This will go on until the satisfaction level reaches zero for a specific ice cream scoop. If additional scoops are consumed thereafter, the marginal utipty of the consumption will be negative.

Marginal utipty is also related to demand and supply through the theory of the paradox of value.

For example, the demand for diamonds is greater than the spce of bread even when the latter is more essential for pfe. This is so because the marginal utipty of a diamond is greater than a spce of bread as it is more scarce. This means that the marginal utipty of diamonds is higher and consumers will be ready to pay higher to acquire a piece of diamond than a spce of bread.

Moreover, as bread is more readily available and people consume enough of it every day, the demand for bread is less than the demand for diamonds. That is why the marginal utipty of spces of bread is less than the marginal utipty of diamonds. Therefore, the price of diamonds will be higher at any instance than the spces of bread in the market.

Key Differences Between Total Utipty and Marginal Utipty

The definitions or meanings of total and marginal utipties are different. Let us see the table to understand more.

Conclusion

Both total utipty and marginal utipty are important concepts in economics which are appped in other fields of study as well. As the theories of utipty project consumer choice, they are important for businesses and stakeholders. Without the knowledge of utipty, it would be ambiguous to determine and map consumer behavior.

The microeconomic study of total and marginal utipties and the differences between them lead to the idea of demand and supply of goods and services in a given market. Therefore, businesses and societies must pay attention to these two topics of economics to understand the market movements and use them in their favor.

FAQs

Qns 1. What is the common ground between total and marginal utipty?

Ans. The common thing about total and marginal utipties is that they both provide an idea of consumer choices. Although the two terms are used to measure different subjects, both are related to the satisfaction derived from using a good or service.

Qns 2. What are utils?

Ans. Utils is a standard unit to measure utipty. It is a relative unit as the satisfaction levels derived from consuming a product vary from person to person. Some economists prefer using monetary denominations to the use of utils for this reason.

Qns 3. Why is the derivation of marginal utipty important for economists?

Ans. The derivation of marginal utipty is important because it shows the demand for a product for an inspanidual customer. In other words, it helps understand consumer choices better.

Qns 4. What is the law of diminishing marginal utipty?

Ans. The law of diminishing marginal utipty states that the marginal utipty diminishes with each additional consumption of a good or service. Therefore, the final marginal utipty may have a negative value as well.

Qns 5. What are the relationships between total utipty and marginal utipty?

Ans. The two relationships between total and marginal utipty are:

Total utipty rises when marginal utipty goes down.

Total utipty is maximum when marginal utipty is zero.