Concepts of Utility



  1. Total Utility (T.U):
    Total utility is the summation of utility derived from the consumptions of different unities of same commodity. In other word, it refers to the total sum of marginal utility derived from the consumption of different units of same commodity. Mathematically it is expressed as:

    T.U = F (Qx)
    Where,
    T.U = total utility of x commodity
    F = fundamental relationship
    Qx = quantity of x commodity

  2. Average Utility (A.U):
    Average utility is obtained by dividing the total utility by number of commodities consumed. In other words average utility is the per unit utility. Mathematically, it is expressed as follows:

    A.Ux = T.Ux / Qx
    Where,
    A.Ux = average utility of x commodity
    T.Ux = total utility of x commodity
    Qx = quantity of x commodity

  3. Marginal Utility (M.U):
    The utility derived from the consumption of additional unit of commodity is known as mardinal utility. In other words, the change in total utility due to the change in consumption of commodity is known as marginal utility. Mathematically it can be expressed as:
    M.Ux = ∆T.Ux / ∆Qx
    Where,
    M.Ux = marginal utility of x commodity
    ∆T.Ux = change in total utility of x commodity
    ∆Qx = change in consumption of x commodity