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Total Utility

Reviewed by Anjaneyulu | Updated on Sep 30, 2020



The utility is the satisfaction that an individual derives from consuming a good or service. Similarly, total utility is the total satisfaction received from consuming a given total quantity of a good or service. In contrast, the marginal utility is the satisfaction gained from consuming an additional quantity of a good or service in question.

Characteristics of Total Utility

Economists sometimes like to subdivide usefulness into individual units they call utils. Because the utility is subjective, however, it differs from person to person. Since it varies constantly depending on the quantity consumed, a utility cannot be measured.

However, it is simply a device that allows economists to speak about the degree of satisfaction obtained from a product or service. Although one definition of usefulness is utility, usefulness is not a quality in economic utility.

For example, water is very useful, but for most people, it doesn't have much utility. On the other hand, judging by the recent market prices for gold, gold is of great use to some people, but it is not very useful.

Relationship with Marginal Utility

One characteristic of marginal utility is that for every successive quantity of a particular good consumed, it always declines. The total utility starts declining when marginal utility becomes negative.

If you like ice cream and eat it, the first scoop will satisfy you the most. When you eat another scoop, you'll probably still like it, but the satisfaction will be lower than for the first one. You won't want ice cream anymore at some point if you continue eating it continually.

In this case, the marginal utility decreases to zero and becomes even negative. This is a daily illustration of the diminishing marginal utility law.

Marginal utility for everything, including income, declines. While many people want to accumulate great wealth, every rupee earned is worth lesser and lesser, because of the marginal utility of what it can buy declines.

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