How to Calculate Marginal Utility
Marginal utility equals the change in total utility divided by the change in quantity consumed: MU = ΔTU ÷ ΔQ.
The Marginal Utility formula
Calculator
Enter total utility before and after the extra unit to get marginal utility and whether utility is still rising.
TU₁, satisfaction at the lower quantity. In the example, 36 utils from 2 pizza slices.
TU₂, satisfaction once the extra unit is eaten. In the example, 48 utils from 3 slices.
Q₁, the starting quantity.
Q₂. When quantity rises by exactly one, MU is just the change in total utility.
Each extra unit over this range added 12 utils, so total utility is still climbing.
- Change in total utility (ΔTU)
- 12
- Change in quantity (ΔQ)
- 1
- Effect on total utility
- Total utility rising
Going from 2 to 3 units changed total satisfaction by 12 utils.
Divide by this to convert the change in total utility into utility per extra unit.
How to calculate Marginal Utility, step by step
- 1Read total utility at both quantities. Take total utility before the extra unit and total utility after it from the table.
- 2Subtract to get the change. ΔTU = TU₂ − TU₁, the extra satisfaction that the added unit provided.
- 3Divide by the change in quantity. MU = ΔTU ÷ ΔQ; when quantity rises by exactly one unit, MU is simply the change in total utility.
- 4Check the sign. A positive MU means total utility is still rising, while a negative MU means the extra unit made the consumer worse off.
Worked example: Marginal Utility
Total utility from pizza slices is 20, 36, 48, and 56 utils for 1 through 4 slices. The marginal utility of the third slice = (48 − 36) ÷ (3 − 2) = 12 utils, and the fourth slice adds 56 − 48 = 8 utils, so marginal utility is diminishing.
Marginal Utility questions
What is the law of diminishing marginal utility?
Each additional unit of a good adds less extra satisfaction than the unit before it, so marginal utility falls as consumption rises. That falling MU is one reason demand curves slope downward.
Can marginal utility be negative?
Yes, marginal utility turns negative when an extra unit lowers total utility, like one slice of pizza too many. Total utility peaks at the quantity where MU reaches zero.
What is the difference between total and marginal utility?
Total utility is the whole amount of satisfaction from all units consumed, while marginal utility is the change in total utility from one more unit. Marginal utility is the slope of the total utility curve.
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