{"id":3553,"date":"2020-02-23T10:04:25","date_gmt":"2020-02-23T10:04:25","guid":{"rendered":"https:\/\/commerceiets.com\/?p=3553"},"modified":"2020-02-23T10:04:25","modified_gmt":"2020-02-23T10:04:25","slug":"utility-analysis","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/utility-analysis\/","title":{"rendered":"UTILITY ANALYSIS"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/utility-analysis\/#UTILITY_ANALYSIS\" title=\"UTILITY\nANALYSIS\">UTILITY\nANALYSIS<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/utility-analysis\/#FEATURES_OF_UTILITY_ANALYSIS\" title=\"FEATURES OF UTILITY ANALYSIS\">FEATURES OF UTILITY ANALYSIS<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/utility-analysis\/#ASSUMPTIONS_OF_UTILITY_ANALYSIS\" title=\"ASSUMPTIONS OF UTILITY ANALYSIS\">ASSUMPTIONS OF UTILITY ANALYSIS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/utility-analysis\/#KINDS_OF_UTILITY\" title=\"KINDS\nOF UTILITY\">KINDS\nOF UTILITY<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/utility-analysis\/#RELATION_BETWEEN_TOTAL_UTILITY_AND_MARGINAL_UTILITY\" title=\"RELATION BETWEEN TOTAL UTILITY AND MARGINAL UTILITY:\">RELATION BETWEEN TOTAL UTILITY AND MARGINAL UTILITY:<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 class=\"has-text-align-center wp-block-heading\" id=\"utility-analysis\"><span class=\"ez-toc-section\" id=\"UTILITY_ANALYSIS\"><\/span><strong>UTILITY\nANALYSIS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h1>\n\n\n\n<p>The simple meaning of \u2018utility\u2019 is \u2018usefulness\u2019. In\neconomics utility is the capacity of a commodity to satisfy human wants.<\/p>\n\n\n\n<p>Utility is the quality in goods to satisfy human\nwants. Thus, it is said that&nbsp;<strong>\u201cWants satisfying capacity of goods\nor services is called Utility.\u201d<\/strong><\/p>\n\n\n\n<p><strong>ACCORDING TO PROF. WAUGH<\/strong><\/p>\n\n\n\n<p>\u201cUtility is the power of commodity to satisfy human\nwants.\u201d<\/p>\n\n\n\n<p><strong>ACCORDING TO FRASER<\/strong><\/p>\n\n\n\n<p>\u201cOn the whole in recent years the wider definition\nis preferred and utility is identified, with desireness rather than with\nsatisfyingness.\u201d<\/p>\n\n\n\n<p><strong>ACCORDING TO MRS. ROBINSON<\/strong><\/p>\n\n\n\n<p>\u201cUtility is the quality of commodities that\nmakes individuals want to buy them.\u201d<\/p>\n\n\n\n<p><strong>ACCORDING TO HIBDON<\/strong><\/p>\n\n\n\n<p>\u201cUtility is the quality of a good to satisfy\na want.\u201d<\/p>\n\n\n\n<p><strong>ACCORDING TO JEVONS<\/strong><\/p>\n\n\n\n<p>\u201cUtility\nrefers to abstract quality whereby an object serves our purpose.\u201d<\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"features-of-utility-analysis\"><span class=\"ez-toc-section\" id=\"FEATURES_OF_UTILITY_ANALYSIS\"><\/span><strong>FEATURES OF<\/strong> <strong>UTILITY ANALYSIS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>THE UTILITY IS\nSUBJECTIVE<\/strong><\/p>\n\n\n\n<p>The utility is subjective because it deals with the\nmental satisfaction of a man. A commodity may have different utility for\ndifferent persons. Cigarette has utility for a smoker but for a person who does\nnot smoke, the cigarette has no utility. Utility, therefore, is subjective.<\/p>\n\n\n\n<p><strong>THE UTILITY IS RELATIVE<\/strong><strong><\/strong><\/p>\n\n\n\n<p>Utility is highly relative and variable. It varies from\nperson to person and from time to time or place to place for the same\nindividual. Again, a same commodity can give different utility to different\npeople. Because, utility a person derives from either good or service depends\nnot only on his psychological attitude but also on his intensity of desire.<\/p>\n\n\n\n<p><strong>UTILITY AND USEFULNESS<\/strong><strong><\/strong><\/p>\n\n\n\n<p>A commodity having utility need not be useful. Cigarette\nand liquor are harmful to health, but if they satisfy the want of an addict\nthen they have utility for him.<\/p>\n\n\n\n<p><strong>UTILITY AND MORALITY<\/strong><strong><\/strong><\/p>\n\n\n\n<p>The utility is independent of morality. Use of liquor or\nopium may not be proper from the moral point of views. But as these intoxicants\nsatisfy wants of the drunkards and opium eaters, they have utility for them.<\/p>\n\n\n\n<p><strong>UTILITY IS UNMEASURABLE<\/strong><strong><\/strong><\/p>\n\n\n\n<p>Although <strong>Prof. Marshall<\/strong> claimed that utility can be cardinally measured in terms of money or price in his marginal utility analysis theory. However, according to <strong>Hicks, Allen and Slutsky<\/strong>, utility cannot be measured in terms of number. It can only be ranked or ordered in terms of preference pattern.<\/p>\n\n\n\n<p><strong>UTILITY IS ABSTRACT<\/strong><strong><\/strong><\/p>\n\n\n\n<p>It is abstract in a sense as it\ncannot be seen or touched or felt. For example, teaching of a teacher, advice\nof a lawyer can neither be seen nor touched. Hence, utility is abstract.<\/p>\n\n\n\n<p><strong>UTILITY AND PLEASURE<\/strong><strong><\/strong><\/p>\n\n\n\n<p>It is not necessary that a\ncommodity possessing utility also gives pleasure whenever it is consumed. An\ninjection possesses utility to an individual. However, it gives him\/her\nphysical pain. Hence, utility and pleasure are unrelated.<\/p>\n\n\n\n<p><strong>MULTI PURPOSE<\/strong><\/p>\n\n\n\n<p>If a commodity is capable of\nsatisfying several wants, it is said to have multi- purpose utility. Example:\nelectricity supplied at our house can be used for various purposes such as\ncharging mobiles, use of televisions, using fans etc. Thus having multi-purpose\nutility.<\/p>\n\n\n\n<p><strong>DEPENDS ON INTENSITY OF WANTS<\/strong><\/p>\n\n\n\n<p>Utility of a commodity is\ndirectly proportional to the intensity or urgency of the want. The more intense\nor urgent the event, the more utility the commodity has. Example: disaster\nmanagement teams have more utility at the same time of disasters, and have less\nutility during normal times.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"assumptions-of-utility-analysis\"><span class=\"ez-toc-section\" id=\"ASSUMPTIONS_OF_UTILITY_ANALYSIS\"><\/span><strong>ASSUMPTIONS OF UTILITY ANALYSIS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul><li>The utility analysis is based on the cardinal concept\nwhich assumes that utility is measurable and additive like weights and lengths\nof goods.<\/li><li>Cardinal or Utility is measurable in terms of money.<\/li><li>The marginal utility of money is assumed to be constant<\/li><li>The consumer is rational who measures, calculates,\nchooses and compares the utilities of different units of the various\ncommodities and aims at the maximization of utility.<\/li><li>He has full knowledge of the availability of commodities\nand their technical qualities.<\/li><li>He possesses perfect knowledge of the choice of\ncommodities open to him and his choices are certain.<\/li><li>They know the exact prices of various commodities and\ntheir utilities are not influencing by variations in their prices.<\/li><li>There are no substitutes.<\/li><\/ul>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"kinds-of-utility\"><span class=\"ez-toc-section\" id=\"KINDS_OF_UTILITY\"><\/span><strong>KINDS\nOF UTILITY<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Various types of utility is as follows:<\/p>\n\n\n\n<p><strong>INITIAL\nUTILITY<\/strong><\/p>\n\n\n\n<p>The utility derived from the first unit of a commodity calls\ninitial utility. Utility derived from the first piece of bread calls initial\nutility. Thus, the initial utility is the utility obtained from the consumption\nof the first unit of a commodity. It is always positive.<\/p>\n\n\n\n<p><strong>TOTAL UTILITY<\/strong><\/p>\n\n\n\n<p>Total Utility is the utility from all units of consumption. <\/p>\n\n\n\n<p><em><strong>ACCORDING TO MYERS<\/strong><\/em><\/p>\n\n\n\n<p>\u201cTotal Utility is the sum of the marginal utilities associated\nwith the consumption of the successive units.\u201d<\/p>\n\n\n\n<p><strong><em>ACCORDING TO LEFTWITCH<\/em><\/strong><\/p>\n\n\n\n<p>\u201cTotal utility refers to the entire amount of\nsatisfaction obtained from consuming various quantities of a commodity.\u201d<\/p>\n\n\n\n<p>Accordingly, the total utility can calculate as:<\/p>\n\n\n\n<p>TU = MU<strong><sub>1<\/sub>&nbsp;<\/strong>+ MU<strong><sub>2<\/sub>&nbsp;<\/strong>+ MU<strong><sub>3<\/sub>&nbsp;<\/strong>+&#8230;&#8230;&#8230;.+ MU<strong><sub>n<\/sub><\/strong><\/p>\n\n\n\n<p><strong>For example:<\/strong> Suppose,\na man consumes five breads at a time. He derives from first bread 20 units of\nsatisfaction from 16, from third 12, from fourth 8 and from fifth 4 i.e., total\n60 units.<\/p>\n\n\n\n<p><strong>This can be shown by the following table:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/total-utility-1.jpg\" alt=\"UTILITY ANALYSIS\" class=\"wp-image-3555\"\/><figcaption><strong>UTILITY<\/strong> <strong>ANALYSIS<\/strong><\/figcaption><\/figure>\n\n\n\n<p>The Total utility curve is as follows:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/TU-1.gif\" alt=\"UTILITY ANALYSIS\" class=\"wp-image-3557\"\/><figcaption><strong>UTILITY<\/strong> <strong>ANALYSIS<\/strong><\/figcaption><\/figure>\n\n\n\n<p><strong>MARGINAL UTILITY<\/strong><\/p>\n\n\n\n<p>Marginal utility is the utility derived from the last or marginal unit of consumption. It refers to the additional utility derived from an extra unit of the given commodity purchased, acquired or consumed or <a href=\"https:\/\/commerceiets.com\/demand\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"demanded (opens in a new tab)\">demanded<\/a> by the consumer.<\/p>\n\n\n\n<p>It is the net addition to total utility made by the\nutility of the additional or extra units of the commodity in its total stock. <\/p>\n\n\n\n<p><strong><em>ACCORDING TO PROF. BOULDING<\/em><\/strong><\/p>\n\n\n\n<p>\u201cThe marginal utility of any quantity of a commodity\nis the increase in total utility which results from a unit increase in its\nconsumption.\u201d<\/p>\n\n\n\n<p><strong><em>ACCORDING TO CHAPMAN<\/em><\/strong><\/p>\n\n\n\n<p>\u201cMarginal utility is the addition made to\ntotal utility by consuming one more unit of commodity.\u201d<\/p>\n\n\n\n<p>It can be calculated as follows:<\/p>\n\n\n\n<p><strong>MU<sub>nth<\/sub>&nbsp;=\nTU<sub>n<\/sub>&nbsp;\u2013 TU<sub>n-1<\/sub><\/strong><\/p>\n\n\n\n<p>Here<\/p>\n\n\n\n<p>MU<strong><sub>nth<\/sub>&nbsp;<\/strong>=\nMarginal utility of nth unit.<\/p>\n\n\n\n<p>TU<strong><sub>n<\/sub>&nbsp;<\/strong>=\nTotal utility of \u201cn\u201d units, and.<\/p>\n\n\n\n<p>TU<strong><sub>n-1<\/sub>&nbsp;<\/strong>=\nTotal utility of n-1 units.<\/p>\n\n\n\n<p><strong>For example<\/strong><\/p>\n\n\n\n<p>Suppose Mr. Shanker is consuming bread and he takes\nfive breads. By taking first unit he derives utility up to 20; second unit 16;\nthird unit 12; fourth unit 8 and from fifth 2. In this example the marginal\nunit is fifth bread and the marginal utility derived is 2. If we will consume\nonly four bread then the marginal unit will be fourth bread and utility will be\n8.<\/p>\n\n\n\n<p><strong>Kinds of Marginal Utility\u2014<\/strong>Marginal utility is of three kinds:<\/p>\n\n\n\n<p>(i) Positive Marginal Utility,<\/p>\n\n\n\n<p>(ii) Zero Marginal Utility,<\/p>\n\n\n\n<p>(iii) Negative Marginal Utility.<\/p>\n\n\n\n<p>It is a matter of general experience that if a man\nis consuming a particular goods, then receiving of next unit of goods reduces\nthe utilities of the goods and ultimately a situation comes when the utility\ngiven by the goods become zero and if the use of the goods still continues,\nthen the next unit will give dis-utility. In other words it can be said that we\nwill derive \u201cnegative utility\u201d.<\/p>\n\n\n\n<p><strong>This can be studied better by\nthe following table:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/MARGINAL-UTILITY-TABLE-1.jpg\" alt=\"UTILITY ANALYSIS\" class=\"wp-image-3556\"\/><figcaption><strong>UTILITY<\/strong> <strong>ANALYSIS<\/strong><\/figcaption><\/figure>\n\n\n\n<p><a href=\"http:\/\/cdn.economicsdiscussion.net\/wp-content\/uploads\/2015\/11\/clip_image0024.jpg\" target=\"_blank\" rel=\"noopener\"><strong><\/strong><\/a><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"275\" height=\"184\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/images.jpg\" alt=\"UTILITY ANALYSIS\" class=\"wp-image-3560\"\/><figcaption><strong>UTILITY<\/strong> <strong>ANALYSIS<\/strong><\/figcaption><\/figure>\n\n\n\n<p>From the table given above it is clear that up to\nthe consumption of the fifth bread we receive positive utility; 6th unit is the\nunit of full satisfaction i.e., Utility derive from that unit is zero. From 7th\nunit the utility received will be negative utility. The table can be\nrepresented in shape of diagram as follows: In diagram: OX axis (line) shows\nunit of bread and OY line shows the Marginal Utility received. From the figure\nit is clear that from the first unit of bread utility received are 20.<a href=\"http:\/\/cdn.economicsdiscussion.net\/wp-content\/uploads\/2015\/11\/clip_image003.jpg\" target=\"_blank\" rel=\"noopener\"><strong><\/strong><\/a><\/p>\n\n\n\n<p>Similarly 2, 3, 4, 5 Unit of bread\u2019s utility is 16,\n12, 8, 4 respectively All these have been shown on OX line which shows positive\nmarginal utility. Utility of the sixth bread is zero and that of the seventh\nbread is negative and negative rectangle has been shown below OX line.<\/p>\n\n\n\n<p><strong>Positive Utility:&nbsp; <\/strong>If by\nconsuming one extra unit of commodity, the total utility increases, then\nmarginal utility is positive.<\/p>\n\n\n\n<p><strong>Zero Utility:<\/strong> When the\nconsumption of a unit of a commodity makes no addition to the total utility,\nthen it is the point of Zero Utility. In table the total utility, after the 6th\nunit is consumed. This is the point of Zero Utility. It is thus seen that the\ntotal utility is maximum when the Marginal Utility is zero.<\/p>\n\n\n\n<p><strong>Negative Utility:<\/strong> Negative Utility is\nthat utility where if the consumption of a commodity is carried to excess, then\ninstead of giving any satisfaction, it may cause dis-satisfaction. The utility\nis such cases is negative. In the table given above the marginal utility of the\n7th unit is negative.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"relation-between-total-utility-and-marginal-utility\"><span class=\"ez-toc-section\" id=\"RELATION_BETWEEN_TOTAL_UTILITY_AND_MARGINAL_UTILITY\"><\/span><strong>RELATION BETWEEN TOTAL UTILITY AND MARGINAL UTILITY:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>There is a close relationship between Total Utility\nand Marginal Utility. As there is increase in the unit of a particular\ncommodity, the Marginal Utility goes on diminishing and Total Utility goes on\nincreasing. Total Utility goes on increasing up to that extent till the\nMarginal Utility becomes Zero. When Marginal Utility is zero Total Utility is\nmaximum.<\/p>\n\n\n\n<p><strong>After Zero Marginal Utility comes to negative and the result is that\nTotal Utility starts reducing. Relationship between Total Utility and Marginal\nUtility can be started as follows:<\/strong><strong><\/strong><\/p>\n\n\n\n<p>(i) When Marginal Utility is reducing, the Total\nUtility will increase so long Marginal Utility does not become zero.<\/p>\n\n\n\n<p>(ii) When Marginal Utility becomes zero; Total\nUtility will be maximum.<\/p>\n\n\n\n<p>(iii) After zero when Marginal Utility is negative\nthen there is reduction in Total Utility.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>\n  <strong>Quantity<\/strong>\n  <\/td><td>\n  <strong>Total Utility<\/strong>\n  <\/td><td>\n  <strong>Marginal Utility<\/strong>\n  <\/td><\/tr><tr><td>\n  1\n  <\/td><td>\n  10\n  <\/td><td>\n  10\n  <\/td><\/tr><tr><td>\n  2\n  <\/td><td>\n  18\n  <\/td><td>\n  8\n  <\/td><\/tr><tr><td>\n  3\n  <\/td><td>\n  24\n  <\/td><td>\n  6\n  <\/td><\/tr><tr><td>\n  4\n  <\/td><td>\n  28\n  <\/td><td>\n  4\n  <\/td><\/tr><tr><td>\n  5\n  <\/td><td>\n  30\n  <\/td><td>\n  2\n  <\/td><\/tr><tr><td>\n  6\n  <\/td><td>\n  30\n  <\/td><td>\n  0\n  <\/td><\/tr><tr><td>\n  7\n  <\/td><td>\n  28\n  <\/td><td>\n  -2\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>With\nthe help of above schedule the relationship between TU and MU is explained as:<\/p>\n\n\n\n<ol><li>In\nthe above schedule MU decreases and TU increases at a decreasing rate upto 5th\nunit of commodity.<\/li><li>MU\nbecomes zero at 6th unit and TU = 30 become maximum.<\/li><li>When\nMC becomes negative, the TU declines from 30 to 28 units at 7th units of a\ncommodity.<\/li><\/ol>\n\n\n\n<p>With\nthe help of the above schedule the relationship between MU and TU can be\nrepresented in the diagram.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"454\" height=\"409\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/mu_and_tu.png\" alt=\"UTILITY ANALYSIS\" class=\"wp-image-3562\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/mu_and_tu.png 454w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/mu_and_tu-300x270.png 300w\" sizes=\"(max-width: 454px) 100vw, 454px\" \/><figcaption><strong>UTILITY<\/strong> <strong>ANALYSIS<\/strong><\/figcaption><\/figure>\n\n\n\n<ol><li>In\nfigure 2, MU curve moves downward having negative slope while in figure 1 TU curve,\nhaving negative positive slope moves upward but tendency to move is towards\nx-axis, which shows decreasing rate.<\/li><li>A\npoint F\u00b4 in figure (2) MU curve cuts the s-axis at the 6th unit and TU curve\nhas its maximum point F which is saturation point.<\/li><li>At\n7th unit MU curve is below x-axis as in figure (2) and TU curve declines from\npoint &#8216;F&#8217; to &#8216;G&#8217; as in figure (1).<\/li><\/ol>\n\n\n\n<p><strong>HIGHLIGHTS<\/strong><\/p>\n\n\n\n<p>(1) Marginal Utility goes on diminishing with the\nconsumption of every additional unit.<\/p>\n\n\n\n<p>(2) Total Utility goes on increasing with the\nconsumption of every additional unit but at a diminishing rate.<\/p>\n\n\n\n<p>(3) Marginal Utility is equal to the increase in the\nTotal Utility. Total Utility is the sum total of the Marginal Utilities derived\nfrom all the units consumed.<\/p>\n\n\n\n<p>(4) When Marginal Utility becomes 0, total utility\ndoes not increase.<\/p>\n\n\n\n<p>(5) When Marginal Utility becomes negative, Total\nUtility decreases.<\/p>\n\n\n\n<p>(6) Increase in Total Utility depends on Marginal\nUtility.<\/p>\n\n\n\n<p>(7) Since Marginal Utility diminishes, Total Utility\nincreases at a diminishing rate.<\/p>\n\n\n\n<p>(8) When Marginal Utility is Zero, Total Utility is\nmaximum.<\/p>\n\n\n\n<p>(9) When Marginal Utility is negative, Total Utility declines.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/demand\/\">Theory of Demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-demand\/\">Law of Demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/demand-function\/\">Demand Function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/exceptions-of-law-of-demand\/\">Exceptions of law of demand<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/elasticity-of-demand\/\">Elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/change-in-demand\/\">Change in demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/price-elasticity-of-demand\/\">Price elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-law-of-demand-and-elasticity-of-demand\/\">Law of demand Vs Elasticity of demand<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/factors-affecting-price-elasticity-of-demand\/\">Factors affecting price elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/production-function\/\">Production function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-short-run-long-run-production-function\/\">Short run vs long run production function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-variable-proportions\/\">Law of variable proportions<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/types-of-demand\/\">Types of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/managerial-economics\/\">Managerial economics<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/characteristics-of-managerial-economics\/\">Characteristics of managerial economics<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-managerial-economics\/\">Scope of managerial economics<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/utility-analysis\/\">Utility analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-diminishing-marginal-utility\/\">Law of diminishing marginal utility<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-equi-marginal-utility\/\">Law of equi marginal utility<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/consumer-equilibrium\/\">Consumers Equilibrium<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/indifference-curve-analysis\/\">Indifference curve analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/consumer-equilibrium-using-indifference-curve-analysis\/\">Consumer equilibrium using indifference curve analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/relationship-between-tp-ap-and-mp\/\">Relationship between TP, AP and MP<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-increasing-returns\/\">Law of increasing returns<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/law-of-diminishing-returns\/\">Law of diminishing returns<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-constant-returns\/\">Law of constant returns<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/returns-to-scale\/\">Returns to Scale<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/economies-and-diseconomies-of-scale\/\">Economies and diseconomies of scale<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/concept-of-costs\/\">Concept of costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/relationship-between-ac-and-mc\/\">Relationship between AC and MC<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/traditional-theory-of-cost\/\">Traditional theory of costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/modern-theory-of-cost\/\">Modern theory of costs<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/explicit-vs-implicit-costs\/\">Explicit vs Implicit costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/revenue\/\">Revenue<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perfect-competition\/\">Perfect competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopoly-meaning\/\">Monopoly<\/a>&nbsp;<\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/price-discrimination\/\">Price discrimination<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-perfect-competition-and-monopoly\/\">Difference between perfect competition and monopoly<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perfect-and-monopolistic-competition\/\">Perfect Vs Monopolistic competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopoly-and-monopolistic-competition\/\">Monopoly and monopolistic competition<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/product-differentiation-strategy\/\">Product differentiation strategy<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopolistic-competition\/\">Monopolistic competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/national-income-in-india\/\">National Income in India<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/measurement-of-national-income\/\">Measurement of national income in India<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/consumption-function\/\">Consumption function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/keynesian-psychological-law-of-consumption\/\">Keynes Psychological law of consumption<\/a><\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noreferrer noopener\">CONNECT ON LINKEDIN<\/a><\/div>\n<\/div>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"266\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-1024x266.jpg\" alt=\"UTILITY ANALYSIS\" class=\"wp-image-787\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-1024x266.jpg 1024w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-300x78.jpg 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-768x199.jpg 768w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-1536x398.jpg 1536w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption>UTILITY ANALYSIS<\/figcaption><\/figure>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>UTILITY ANALYSIS The simple meaning of \u2018utility\u2019 is \u2018usefulness\u2019. In economics utility is the capacity of a commodity to satisfy human wants. Utility is the quality in goods to satisfy human wants. Thus, it is said that&nbsp;\u201cWants satisfying capacity of goods or services is called Utility.\u201d ACCORDING TO PROF. WAUGH \u201cUtility is the power of&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/utility-analysis\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;UTILITY ANALYSIS&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":3564,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[113,92],"tags":[],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3553"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=3553"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3553\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/3564"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=3553"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=3553"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=3553"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}