Answer to Question #95696 in Microeconomics for SHAHADAT HOSSEN

Question

Explain the relationship between total utility and marginal utility. Describe the Law of
Diminishing Marginal Utility. In the case of which of the following commodities the law
doesn’t work: Mango, Sweets, Sugar, Money, Rice, Wealth, and Ornament.

Answer 1

Utility is the satisfaction that a person derives from the consumption of a good or service. 

Total utility is the total satisfaction received from consuming a given total quantity of a good or service, while marginal utility is the satisfaction gained from consuming an additional quantity of a particular good or service.

Marginal utility (MU) is the difference/delta/addition/reduction in total utility when you consume one additional unit of good. So the relationship can be show as:

$MU = \Delta(TU)/\Delta(Q)$

The Law of Diminishing Marginal Utility:

all else equal, as consumption increases the marginal utility derived from each additional unit declines.

In this case the law o diminishing marginal utility does not apply to money and wealth.