UTILITY MEANING , TYPES , RELATONSHIP,EXAMPLES

1. U T I L I T Y
PRESENTED BY
GARV
EKNOOR
KIRTI
VISHAL
PRESENTED TO
Miss Neha Mam

2. Utility

3. What is utility?
•Utility ty can be defined as the amount of
satisfaction derived from the consumption of a
commodity.
• It refers to they want satisfying power of a
commodity
• Level of satisfaction

4. Types of utility
Cardinal utility Total utility
Ordinal utility Marginal utility

5. Cardinal utility
It’s assume that you utility is measured or quantifiable that is it can be
measured in some units
 According to this approach, how much utility a consumer obtained
from goods can be expressed in cardinal numbers such as 123 and so
4th
 It is expressed as a quantity measured in units which are called Utils
 Example it can be set that an apple has 10 you tells and mango has 5
utils it implies that utility of an apple is twice that of a mango

6. Ordinal Utility
Ordinal utility approach is purely subjective and immeasurable
 Preference among goods can The rank using ordinal numbers such as
first , second , third etc .
 Utility from one source may be ‘equal to’ or ‘more than ’ or ‘less than
’ utility from another source. But it is possible to state the difference
between in absolute or numeric units

7. Total utility and marginal utility
Total utility
Total utility refers to the total satisfaction derived by the
consumer from the consumption of a specific quantity of a
commodity
In other words total utility is some total of utilities derived
from all units consumed
Marginal utility
Marginal utility refers to the additional utility derived
from the consumption of one additional utility of a commodity
MUNth = TUn - Tun-1

8. Relationship between total
utility and marginal utility

9.  Total utility curve has a positive slope but it’s
goes on decreasing steadily quantity
consumed is increased. This shows the
marginal utility decreases but is positive as
long as total utility increases
 When total utility is maximum , marginal utility
is zero
 The slope of total utility curve going decreasing
showing that marginal utility is negative . Thus,
when total utility decline marginal utility is

10. Example

11. Utilities schedule for mangoes
Units of mango consume
Total utility
(utils)
Marginal utility
(Utils )
0 0 Undefined
1 10 10
2 17 7
3 20 3
4 22 2
5 22 0
6 19 -3

12. Graph of total utility and marginal
utility
0
5
10
15
20
25
0 2 4 6 8
total
utility
number of mangos
total utility
• Panel A represents its total
marginal utility
• Panel B represents marginal utility
• When total utility increase
marginal utility stays positive
• When total utility is maximum
marginal utility is zero
• When total utility decreases
marginal utility becomes negative -4
-2
0
2
4
6
8
10
12
0 2 4 6 8
marginal
utility
number of mangos
marginal utility

13. Doubt session