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:

• \( TU_2 \) — 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 total utility values at two different quantities. Ensure Q₂ is greater than Q₁ for meaningful results. All values must be valid numbers.

5. Frequently Asked Questions (FAQ)

Q1: What does negative marginal utility mean?
A: Negative MU means consuming an additional unit actually decreases total satisfaction (disutility).

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 MU used in pricing decisions?
A: Businesses aim to set prices where marginal utility equals marginal cost to maximize profit.

Q4: What's the difference between total and marginal utility?
A: Total utility is the overall satisfaction from all units consumed, while marginal utility is just from the last unit.

Q5: Can marginal utility be zero?
A: Yes, when consuming an additional unit provides no additional satisfaction.