1. What is Marginal Utility?

Marginal Utility is the additional satisfaction or benefit a consumer derives from consuming one more unit of a good or service. It helps explain how consumers make choices to maximize their utility.

2. How Does the Calculator Work?

The calculator uses the Marginal Utility formula:

Where:

• \( \Delta\text{Total Utility} \) — Change in total utility (utils)
• \( \Delta\text{Quantity} \) — Change in quantity consumed (units)

Explanation: The formula calculates the rate of change in total utility as consumption changes by one unit.

3. Importance of Marginal Utility

Details: Understanding marginal utility is essential in economics as it explains the law of diminishing marginal utility and helps determine optimal consumption levels.

4. Using the Calculator

Tips: Enter the change in total utility (in utils) and the change in quantity consumed (in units). Both values must be valid (ΔQuantity cannot be zero).

5. Frequently Asked Questions (FAQ)

Q1: What is the law of diminishing marginal utility?
A: It states that as a person consumes more units of a good, the additional satisfaction from each additional unit tends to decrease.

Q2: Can marginal utility be negative?
A: Yes, when consumption of an additional unit actually decreases total satisfaction (e.g., eating too much food).

Q3: How is marginal utility used in pricing?
A: Consumers will purchase goods until the marginal utility per dollar is equal across all goods, which helps explain demand curves.

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

Q5: How does this relate to consumer equilibrium?
A: Consumers reach equilibrium when the marginal utility per dollar spent is equal across all goods they consume.