2 Marginal Utility
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Utility
Utility
Total and marginal utility
Darren’s utility from consuming crisps (daily) 16 14
Utility (utils)
12 10 8 6 4
Packets of crisps
TU in utils
0 1 2 3 4 5 6
0 7 11 13 14 14 13
2 0 -2
0
1
2
3
4
Packets of crisps consumed (per day)
5
6
Darren’s utility from consuming crisps (daily) 16
TU
14
Utility (utils)
12 10 8 6 4
Packets of crisps
TU in utils
0 1 2 3 4 5 6
0 7 11 13 14 14 13
2 0 0
1
2
3
4
-2
Packets of crisps consumed (per day)
5
6
Darren’s utility from consuming crisps (daily)
16
TU
14
Utility (utils)
12
MU Packets TU of crisps in utils in utils
10
0 1 2 3 4 5 6
8 6 4
7 4 2 1 0 -1
0 7 11 13 14 14 13
2 0 0
1
2
3
4
-2
Packets of crisps consumed (per day)
5
6
Darren’s utility from consuming crisps (daily)
16
TU
14
Utility (utils)
12
MU Packets TU of crisps in utils in utils
10
0 1 2 3 4 5 6
8 6 4
7 4 2 1 0 -1
0 7 11 13 14 14 13
2 0 0
1
2
3
4
-2
Packets of crisps consumed (per day)
5
MU
6
Darren’s utility from consuming crisps (daily)
16
TU
14
∆TU = 2
Utility (utils)
12
∆Q = 1
10 8
MU = ∆TU / ∆Q
6 4 2 0 0
1
2
3
4
-2
Packets of crisps consumed (per day)
5
MU
6
Darren’s utility from consuming crisps (daily)
16
TU
14
∆TU = 2
Utility (utils)
12
∆Q = 1
10 8
MU = ∆TU / ∆Q = 2/1 = 2
6 4 2 0 0
1
2
3
4
-2
Packets of crisps consumed (per day)
5
MU
6
Utility
Consumer surplus
Tina’s marginal utility from petrol
120
MU, P (pence per litre)
110 100 90 80 70 60 50 40 0
250
500
Q (litres per annum)
750
1000
Tina’s marginal utility from petrol
120
MU, P (pence per litre)
110
a
100
Consumer surplus
90
b c
80
MU
70 60 50 40 0
250
500
Q (litres per annum)
750
1000
Consumer surplus MU, P
P1
MU
O
Q1
Q
Consumer surplus MU, P
P1
Total consumer expenditure O
MU
Q1
Q
Consumer surplus MU, P
P1
Total consumer surplus
Total consumer expenditure O
MU
Q1
Q
Utility
Deriving an individual person’s demand curve
Deriving an individual person’s demand curve MU, P
P1
a
Consumption at Q1 where P1 = MU
MU = D
O
Q1
Q
Deriving an individual person’s demand curve MU, P
P1
a
Consumption at Q2 where P2 = MU
b
P2
MU = D
O
Q1
Q2
Q
Deriving an individual person’s demand curve MU, P
P1
a
Consumption at Q3 where P3 = MU
b
P2
c
P3
MU = D
O
Q1
Q2
Q3
Q
Utility
Total and marginal utility
Darren’s utility from consuming crisps (daily) 16 14
Utility (utils)
12 10 8 6 4
Packets of crisps
TU in utils
0 1 2 3 4 5 6
0 7 11 13 14 14 13
2 0 -2
0
1
2
3
4
Packets of crisps consumed (per day)
5
6
Darren’s utility from consuming crisps (daily) 16
TU
14
Utility (utils)
12 10 8 6 4
Packets of crisps
TU in utils
0 1 2 3 4 5 6
0 7 11 13 14 14 13
2 0 0
1
2
3
4
-2
Packets of crisps consumed (per day)
5
6
Darren’s utility from consuming crisps (daily)
16
TU
14
Utility (utils)
12
MU Packets TU of crisps in utils in utils
10
0 1 2 3 4 5 6
8 6 4
7 4 2 1 0 -1
0 7 11 13 14 14 13
2 0 0
1
2
3
4
-2
Packets of crisps consumed (per day)
5
6
Darren’s utility from consuming crisps (daily)
16
TU
14
Utility (utils)
12
MU Packets TU of crisps in utils in utils
10
0 1 2 3 4 5 6
8 6 4
7 4 2 1 0 -1
0 7 11 13 14 14 13
2 0 0
1
2
3
4
-2
Packets of crisps consumed (per day)
5
MU
6
Darren’s utility from consuming crisps (daily)
16
TU
14
∆TU = 2
Utility (utils)
12
∆Q = 1
10 8
MU = ∆TU / ∆Q
6 4 2 0 0
1
2
3
4
-2
Packets of crisps consumed (per day)
5
MU
6
Darren’s utility from consuming crisps (daily)
16
TU
14
∆TU = 2
Utility (utils)
12
∆Q = 1
10 8
MU = ∆TU / ∆Q = 2/1 = 2
6 4 2 0 0
1
2
3
4
-2
Packets of crisps consumed (per day)
5
MU
6
Utility
Consumer surplus
Tina’s marginal utility from petrol
120
MU, P (pence per litre)
110 100 90 80 70 60 50 40 0
250
500
Q (litres per annum)
750
1000
Tina’s marginal utility from petrol
120
MU, P (pence per litre)
110
a
100
Consumer surplus
90
b c
80
MU
70 60 50 40 0
250
500
Q (litres per annum)
750
1000
Consumer surplus MU, P
P1
MU
O
Q1
Q
Consumer surplus MU, P
P1
Total consumer expenditure O
MU
Q1
Q
Consumer surplus MU, P
P1
Total consumer surplus
Total consumer expenditure O
MU
Q1
Q
Utility
Deriving an individual person’s demand curve
Deriving an individual person’s demand curve MU, P
P1
a
Consumption at Q1 where P1 = MU
MU = D
O
Q1
Q
Deriving an individual person’s demand curve MU, P
P1
a
Consumption at Q2 where P2 = MU
b
P2
MU = D
O
Q1
Q2
Q
Deriving an individual person’s demand curve MU, P
P1
a
Consumption at Q3 where P3 = MU
b
P2
c
P3
MU = D
O
Q1
Q2
Q3
Q
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