Total Utility (TU) is the total satisfaction gained from consuming a given number of goods. However, total utility may not rise in line with the quantity purchased.
Marginal Utility (MU) is the additional or extra utility gained from the last unit purchased of the product. For most goods and services marginal utility diminishes as consumption increases. For …show more content…
A shilling is the measure of less pleasure, or satisfaction of any kind, to a rich man than to a poor one. A rich man in doubt whether to spend a shilling on a single cigar, is weighing against one another smaller pleasures than a poor man, who is doubting whether to spend a shilling on a supply of tobacco that will last him for a month. The clerk with £100 a-year will walk to business in a much heavier rain than the clerk with £300 a-year; for the cost of a ride by tram or omnibus measures a greater benefit to the poorer man than to the richer. If the poorer man spends the money, he will suffer more from the want of it afterwards than the richer would. The benefit that is measured in the poorer man’s mind by the cost is greater than that measured by it in the richer man’s mind. ”
The law of Diminishing Marginal Utility is not universally applicable. The law does not apply to all types of commodities and persons. A drunkard gets more satisfaction on taking ‘successive’ cups of wine. Greed increase with more money (with some people). In short, the fundamental defect in the law of Diminishing Marginal Utility is that all its attention is focused on a single commodity. Actually a consumer is thinking of many other things that he could buy with the same sum of money. That is why it is more proper to express consumer’s demand in terms of his scale of