Utility refers to the amount of satisfaction a person gets from consumption of a certain item.and marginal utility refers to the addition made to total utility, we get after consuming one more unit. An individual's wants are unlimited in number yet each individual's want is satiable. If the marginal utility of an orange changes to two, then the marginal utility per dollar spent of an orange would become two. At this point the marginal utility per dollar spent on both apples and oranges would be equal to two and it means that we are using our budget efficiently (by maximizing our utility given our budget).

In this formula, MU(Q) represents the marginal utility of the Qth unit consumed, TU(Q) represents the total utility of consuming Q units, and so on. The concept of marginal utility is an important component in the rational decision-making model (a model showing how individuals make consumer decisions based on a logical thought process). Oct 23, 2018 · Positive marginal utility = Increase in total utility. If the MU is a positive unit, we may say that the total utility goes on increasing. It means that the consumer is getting positive satisfaction out of each unit consumed. Zero marginal utility = Maximum total utility. When the MU becomes zero or neutral, the total utility is at its maximum.