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Total Utility Marginal Utility and their Relationship- Microeconomics

Suppose a consumer wants to consume two goods which are available only in integer units. The two goods are equally priced at Rs 10 and the consumer’s income is Rs 40. The relation between total and marginal utility is explained with the help of Table 1. All those goods and services which have the capacity to satisfy human wants are said to contain utility in the viewpoint of economics.

Explain any four exceptions of the law of Diminishing marginal utility. (VIII) There are no exceptions to the law of diminishing marginal utility. 1) Total utility and marginal utility of the very first unit of x consumed, are the same. When the tops of these blocks are joined by a smooth line, we obtain the MU curve. When the former reaches the highest point Q1 the latter touches the X-axis at point С where the MU is zero.

In the above table, there are three forms of marginal utility (MU) as positive, zero, and negative marginal utility. Up to 5 units of consumption, marginal utility (MU) is decreasing and remains positive. Until the marginal utility (MU) is positive, total utility (TU) surges/rises at a declining rate.

Point of satiety means ………………. (a) TU is rising and MU is falling (b) TU is falling and MU is negative

Hence, it is the change in total utility while consuming one more unit of commodity. In other words, it is the ratio of change in total utility with the change in units of a commodity (normally one unit). The above table explains the relationship between total utility and marginal utility.On the basis of the table Total utility and Marginal Utility curves (TU and MU) can be derived with the following diagram. Marginal utility derived from various units of a commodity and its total utility are interrelated. This can be easily followed from the hypothetical example is given in the table below. By connecting the tops of these rectangles with a smooth line, we get the TU curve that peaks at point Q and then slowly declines.

• When the consumer consumes 2nd unit of goods, TU increases to 18 utils from 10 utils and MU decreases when mu is falling tu is to 8 utils.
• Explain any four exceptions of the law of Diminishing marginal utility.
• The MU curve is represented by the increment in total utility shown as the shaded block for each unit in the figure.
• When the tops of these blocks are joined by a smooth line, we obtain the MU curve.
• This can be easily followed from the hypothetical example is given in the table below.

Maximum Maharashtra State Board Economics 12th Standard HSC Maharashtra State Board students prefer Balbharati Textbook Solutions to score more in exams. In his estimation, the first apple is the best out of the lot available to him and thus gives him the highest satisfaction, measured as 20 utils. The second apple will naturally be the second best with lesser amount of utility than the first, and has 15 utils. It is the representation of negative utility and total utility declines. 2) As the consumer consumes further units of x, the total utility increases at a diminishing rate and marginal utility goes on diminishing. It can be seen from the above schedule that the consumer substitute X1 for X2 but continues to get the same satisfaction.

Answered: 10 When MU is falling, TU is: a

To draw the MU curve, we take marginal utility from column (3) of the table. When the consumer buys apples he receives them in units, 1, 2, 3, 4 etc., as shown in table 1. To begin with, 2 apples have more utility than 1; 3 more utility than 2, and 4 more than 3. The units of apples which the consumer chooses are in a descending order of their utilities. 4) After this point, any additional unit consumed further results in a decline in the total utility, while marginal utility becomes negative. 1) State and explain the law of diminishing marginal utility with exceptions.

As the consumer consumes the first unit of commodity, s/he obtains 10 utils of utility. When the consumer consumes 2nd unit of goods, TU increases to 18 utils from 10 utils and MU decreases https://1investing.in/ to 8 utils. Accordingly, when the consumer consumes the 6th unit of goods, MU decreases to zero where TU becomes maximum (30 utils).

When the TU curve starts falling from Q onwards, the MU becomes negative from С onwards. 6) Consumption beyond the point of satiety transforms satisfaction into dissatisfaction. In other words, a consumer starts experiencing the ill effects of consumption. MU of the commodity becomes negative when TU of a commodity is …………. MU of the commodity becomes negative when TU of a commodity is ______. With the help of the above schedule the relationship between MU and TU can be
represented in the diagram.

Relationship between Total Utility and Marginal Utility

IV) State and explain the law of DMU and Explain its assumption. Also join our Facebook Group “Economics Students Society” to stay connected with us and receive different knowledgeable material uploaded on Page. Below listed, you can find solutions for Chapter 2 of Maharashtra State Board Balbharati for Economics 12th Standard HSC Maharashtra State Board.

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After the 6th unit consumption of goods, MU is negative (-2) and due to negative MU, total utility declines to 28 utils from 30 utils. Thus, the consumer gets maximum satisfaction when MU is zero and that point is known as the point of saturation. Marginal utility is the addition made to total utility by having an additional unit of the commodity. When the consumer consumes the third apple, the total utility becomes 45 utils. Thus, marginal utility of the third apple is 10 utils (45—35).

When the consumer consumes 2nd unit of goods, TU increases to 18 utils from 10 utils and MU decreases to 8 utils. 5) In the case of 5th and 6th units, the marginal utility derived is less than the market price paid. A rational consumer will not buy further once the equality between marginal utility and price is established. The questions involved in Balbharati Solutions are essential questions that can be asked in the final exam.

Complete the following statement by choosing the correct alternatives: When MU is falling, TU is _______. – Economics

But for every increase of 1 unit of X1; the consumer gives up lesser and lesser quantity of X2. Therefore, this is called the law of diminishing marginal rate of substitution. Shaalaa.com has the Maharashtra State Board Mathematics Economics 12th Standard HSC Maharashtra State Board Maharashtra State Board solutions in a manner that help students
grasp basic concepts better and faster.

The detailed, step-by-step solutions will help you understand the concepts better and clarify any confusion. Balbharati solutions for Mathematics Economics 12th Standard HSC Maharashtra State Board Maharashtra State Board 2 (Utility Analysis) include all questions with answers and detailed explanations. This will clear students’ doubts about questions and improve their application skills while preparing for board exams. The marginal utility can be defined as an extra utility drawn from an extra unit of a commodity.

When a consumer consumes the 6th unit of the commodity, s/he gets no utility or there is zero utility and as a result, total utility (TU) remains constant and becomes maximum. If we sum the utilities obtained from the consumption of different units of a particular commodity at a given time, then we get the numerical value of total utility. As per the law of diminishing marginal utility, the measurement of utility is assumed to be _____.

There is a direct relationship between total utility and marginal utility. Total utility is always based on marginal utility as a total utility (TU) is the summation of marginal utilities. The relationship between TU and MU can be explained with help of the following table.