Part III: Microeconomics
Total Utility and Marginal Utility
Total utility is the total amount of satisfaction an individual derives from consuming a specific quantity. The total utility
for Doug when he drank all that water was enough to satisfy his wants. The marginal utility in that scenario decreased
with every unit consumed. The difference between the two is that total utility measures all of the units consumed and
the overall satisfaction it gave that person. When eating food, we may consider total utility; however, subconsciously
we may be thinking marginal utility. When marginal utility becomes negative, total utility begins to decline. This oc-
curred when Doug began to drink his second glass of water. Not only did the second glass of water provide a diminish-
ing marginal utility, it also caused total utility to decrease.
Mini-Review
- What is marginal utility?
A. The extra unit of production that results from added units of labor
B. The relationship between quantity supplied and prices
C. The concept that satisfaction rises as more goods are consumed
D. A term that explains the extra satisfaction gained by consuming one more unit
E. Both A and B - What is total utility?
A. The difference between each unit consumed
B. The overall satisfaction consumption gives
C. The usefulness of a product
D. The total number of labor hours worked to produce a product
E. None of the above - What is utility?
A. The usefulness of a product
B. The satisfaction a product brings to an individual
C. The time it takes to consume a product
D. The durability of a product
E. The price of a product
Mini-Review Answers
- D. Marginal utility explains the extra satisfaction one derives from consuming an extra unit.
- B.Total utility is the overall satisfaction consumption gives. It is not to be confused with the overall usefulness
of a product. - B.Utility is the satisfaction the unit brings to an individual. Again, it is not to be confused with usefulness. A picture
on the wall is not useful; however, it may bring plenty of satisfaction to someone.
Consumer Choices
Rational behavior, preferences, budget considerations, and prices all factor into the choices that consumers make. Let’s
take a closer look: