Marginal Utility Formula

The following is the formula for calculating a marginal utility.

marginal utility formula


Marginal Utility Definition

Marginal utility is a measure of the change in satisfaction (or utility) of an object as more units of that object are consumed. For example, a persons satisfaction is likely to increase if they are eating 2 pieces of candy over 1. If that same person were to eat 10 pieces instead, their satisfaction may go down because they feel sick. This relationship is the marginal utility, and the formula above measures this value as an average.


Example

The following is an example problem of how to calculate a marginal utility.

  1. First, we must set up problem. Let’s take a look at a group of people buying and using smartphones.
  2. Next, we ask a group of people on a scale of 1-10 how happy they are when they buy 1 phone for use. After taking the survey we find on average people scored a 7/10 satisfaction with 1 phone.
  3. Next, we ask the same group how happy they would be if they had to buy 2 phones. Unanimously, they said they would be less happy having to buy 2 phones and scored it 3/10. This seems obvious because most people don’t need more than one phone and don’t want to spend money on a second.
  4. With the information above we can calculate a marginal utility of (2-1)/(3-7) = -1/2. This means the marginal utility is negative and there is a negative relationship between increased consumption and increased satisfaction.

Related Calculators


Related Terms

marginal utility formula
marginal utility equation
total utility formula
calculate marginal utility
marginal utility per dollar formula
total utility cost formula
calculating marginal benefit
marginal benefit equation
law of diminishing marginal utility formula
total utility and marginal utility formula
calculating total utility
formula of total utility
marginal utility of income formula
total utility equation
marginal utility calculator economics
marginal utility formula calculator
diminishing marginal utility formula
marginal utility formula economics
calculating marginal utility per dollar
law of equi marginal utility formula
formula to calculate marginal utility
marginal utility curve mathematical formula
mathematical formula of marginal utility curve
marginal utility of money formula
marginal utility mathematical formula
equi marginal utility formula
weighted marginal utility formula
marginal utility calculator online
basic marginal utility curve mathematical formula
marginal utility formula microeconomics
formula for calculating total utility
marginal utility calculation example
marginal utility formula example