1. What is Marginal Utility?

Marginal Utility (MU) is the additional satisfaction or benefit a consumer gains from consuming one more unit of a good or service. It is a fundamental concept in microeconomics that helps explain how consumers make choices.

2. How Does the Calculator Work?

The calculator uses the Marginal Utility formula:

Where:

• \( MU \) — Marginal Utility
• \( \Delta TU \) — Change in Total Utility
• \( \Delta Q \) — Change in Quantity consumed

Explanation: The formula calculates how much additional utility is gained from consuming one additional unit of a good or service.

3. Importance of Marginal Utility Calculation

Details: Understanding marginal utility is crucial for analyzing consumer behavior, determining optimal consumption levels, and explaining the law of diminishing marginal utility.

4. Using the Calculator

Tips: Enter the change in total utility and the change in quantity consumed. The change in quantity must be greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is the law of diminishing marginal utility?
A: This economic principle states that as a person consumes more units of a good, the additional satisfaction from each additional unit decreases.

Q2: Can marginal utility be negative?
A: Yes, when consumption of an additional unit actually decreases total satisfaction, resulting in negative marginal utility.

Q3: How is marginal utility used in pricing?
A: Businesses use marginal utility concepts to set prices and understand how consumers value additional units of their products.

Q4: What's the difference between total utility and marginal utility?
A: Total utility is the overall satisfaction from consuming all units, while marginal utility is the satisfaction from just the last unit consumed.

Q5: How does marginal utility relate to demand curves?
A: The diminishing marginal utility helps explain why demand curves typically slope downward - as price decreases, consumers are willing to buy more units despite lower marginal utility.