Marginal Utility Calculator

What Is Utility?

In economics, utility measures the satisfaction or benefit a consumer gets from consuming a good or service. It is measured in abstract units called utils.

Total Utility vs. Marginal Utility

• Total Utility (TU): cumulative satisfaction from consuming n units
• Marginal Utility (MU): the additional satisfaction from consuming one more unit

Formula

MU = ΔTU / ΔQ = TU(n) − TU(n−1)

The Law of Diminishing Marginal Utility

As you consume more of a good, each additional unit gives you less additional satisfaction.

Example: Your first slice of pizza is great (MU = 10). Your third slice is okay (MU = 4). Your fifth slice might make you feel sick (MU = −2).

Utility Table Example

Maximum Utility is at Q=5 or Q=6 (where MU = 0 or turns negative). Diminishing returns begin at Q=2 (where MU starts falling from 10).

Consumer Equilibrium

A rational consumer maximizes utility by consuming goods until: MU / Price = equal for all goods

This is the equimarginal principle: spend so that the last dollar spent on each good gives the same marginal utility.

Put a price in the optional box and the table gains an MU-per-unit-of-money column, which is the number the equimarginal principle actually compares. Run the calculator twice, once for each good, and buy in whichever column is currently higher until the two meet.

Two things worth noticing when you do. The MU-per-money column falls as you consume more, which is what makes the rule converge instead of sending you to a corner. And a good can have high marginal utility and still be the wrong purchase, because a slice of cake worth 8 utils at four dollars loses to a coffee worth 3 utils at one dollar. The whole point of dividing by price is that utility alone never settles anything.

Where the maximum sits

The table below peaks at 30 utils, reached at both Q=5 and Q=6. That is not sloppiness in the example, it is what MU = 0 means: the sixth unit adds nothing, so total utility is flat across that step. The calculator reports the first quantity at which the peak is reached, since paying for a unit that adds nothing is a worse deal than stopping.

Enter your total utility values (one per quantity level) to get your MU table.