Nature of Marginal Utility Curve
Describe the nature of marginal utility curve.
Marginal Utility
Marginal utility is the change in total utility by the consumption of an additional unit of a commodity. In other words, marginal utility is the addition to the total utility derived from the consumption of one additional unit of the commodity. It is also called additional utility.
Algebraically, marginal utility can be expressed in the following way:
Where ,
-
- MU = Marginal utility
The relationship between total utility and marginal utility can be understood with the help of given table.
| Units of Oranges | Marginal Utility (Units) |
|---|---|
| 1 2 3 4 5 6 | 8 6 4 2 0 -2 |
On the basis of above table, we can draw following marginal utility curve.
In the figure, MU is the marginal utility curve, which is downward slopping. Downward slopping MU curve indicates that MU is declining. When the fifth unit of orange is consumed, the MU curve touches the horizontal axis which implies that MU is zero. When the sixth unit of orange is consumed, MU becomes negative. Therefore, MU curve lies below the X-axis.