At quantity 1 total utility is 20 At quantity 2 total utilit

At quantity 1 total utility is 20

At quantity 2 total utility is 36

At quantity 3 total utility is 51

At quantity 4 total utility is 55

What is the marginal utility at

quantity 1? and at quantity 4?

Solution

Marginal utility is calculate as follows -

MU = TU_n - TU_n-1

Where,

TU = Total Utility

Calculate Marginal Utility at quantity 1 -

Marginal utility = Total utilty at quantity 1 - Total utility at quantity 0

Quantity 0 implies no consumption. This means at quantity 0, total utility is also 0.

Marginal utility = 20 - 0 = 20

The marginal utility at quantity 1 is 20.

Total utility at quantity 3 = 51

Total utility at quantity 4 = 55

Calculate Marginal Utility at quantity 4 -

Marginal utility = Total utilty at quantity 4 - Total utility at quantity 3

Marginal utility = 55 - 51 = 4

The marginal utility at quantity 4 is 4.