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Marginal Utility Calculator
This Marginal Utility Calculator may be used to determine how much satisfaction or value a customer derives from using your product or service.
Results
| Quantity | Total Utility | Marginal Utility | Average Utility |
|---|---|---|---|
| 1 | 150 | 150 | 150 |
What is Marginal Utility
The pleasure and satisfaction we derive from using a product or service is referred to as utility. For instance, when we eat supper, we get a certain degree of utility, which is also known as contentment. Utility, can vary. For instance, eating at a high-end a la carte restaurant rather than McDonalds may provide better value. To put it another way, utility is a measurement of our choices and the price we are ready to pay for them.
The pleasure a customer derives from each extra unit consumed is known as marginal utility. It determines usefulness after the first product has been used (the marginal amount).
Marginal Utility Formula
Total utility refers to the pleasure or satisfaction we get from using a product or service. Marginal Utility is calculated by subtracting the prior total utility from the current total.
The formula for calculating marginal utility is as follows:
Marginal Utility = Change in Total Utility / Change in Number of Units Consumed
Similarly, marginal utility may be determined by subtracting total utility consumed at point 'n' from total utility consumed at point 'z' - where point 'n' represents the current level of utility and point 'z' represents the previous level of utility. This would subsequently be divided by the total number of units consumed at point 'n' minus the number of units consumed at point 'z' to compute marginal utility.
Marginal Utility = (TUn - TUz) / (UCn - UCz)
Let's say the table below depicts how Mr Flow obtains utility in exchange for a bag of chips. He gets 25 utility from one bag. He earns a total of 55 utility from two bags. As a result, we calculate the margin by computing the difference between the two. In this case, the answer is 55 – 25 = 30.
| Quantity | Total Utility | Marginal Utility | Average Utility |
|---|---|---|---|
| 1 | 25 | 25 | 25 |
| 2 | 55 | 30 | 27.5 |
| 3 | 65 | 10 | 21.67 |
| 4 | 70 | 5 | 17.5 |
| 5 | 78 | 8 | 15.6 |
