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's a fundamental concept in microeconomics that helps explain consumer choice behavior.

2. How Does the Calculator Work?

The calculator uses the Marginal Utility formula:

Where:

• \( MU \) — Marginal Utility
• \( TU_2 \) — Total Utility at quantity 2
• \( TU_1 \) — Total Utility at quantity 1
• \( Q_2 \) — Quantity 2
• \( Q_1 \) — Quantity 1

Explanation: The formula calculates the change in total utility divided by the change in quantity consumed.

3. Importance of Marginal Utility

Details: Understanding marginal utility helps businesses set prices, helps economists understand consumer behavior, and explains the law of diminishing marginal utility.

4. Using the Calculator

Tips: Enter the total utility values at two different quantities (TU₂ and TU₁) and the corresponding quantities (Q₂ and Q₁). Q₂ must be different from Q₁.

5. Frequently Asked Questions (FAQ)

Q1: What does negative marginal utility mean?
A: Negative MU means consuming an additional unit actually decreases total satisfaction, which can happen with overconsumption.

Q2: What is the law of diminishing marginal utility?
A: It states that as consumption increases, the marginal utility derived from each additional unit tends to decrease.

Q3: How is marginal utility used in pricing?
A: Businesses aim to price goods where marginal utility equals marginal cost to maximize profit.

Q4: Can marginal utility be zero?
A: Yes, when consuming more of a good provides no additional satisfaction.

Q5: How does this relate to indifference curves?
A: Marginal utility helps explain the slope of indifference curves in consumer choice theory.