Concept of Utility – Average, Marginal And Total Utility - SS2 Economics Lesson Note

Utility refers to the satisfaction or happiness that a consumer derives from consuming a particular good or service. In economics, there are three different types of utility: average, marginal, and total utility.

Average utility 

Average utility is the total utility derived from consuming a good or service divided by the quantity of the good or service consumed. It measures the average level of satisfaction or happiness that a consumer derives from each unit of the good or service. 

Marginal utility

Marginal utility is the additional satisfaction or happiness that a consumer gets from consuming one additional unit of a good or service. Marginal utility tends to diminish as a consumer consumes more units of a good or service.

Total utility

Total utility is the overall satisfaction or happiness that a consumer gets from consuming a particular quantity of a good or service. It represents the sum of all marginal utilities derived from each unit of the good or service consumed up to a certain point.