Question

What is Marginal utility?

Hint:

Remember: TU peaks where MU = 0; before that MU $>$ 0, after that MU $<$ 0.

Answer 1

Concept: Total utility (TU) is the sum of satisfaction from all units consumed, while marginal utility (MU) is the increment: $MU_n = TU_n - TU_{n-1}$.
Law: As consumption of a good rises, MU typically falls after a point (diminishing MU) due to saturation of wants.
Implications: Consumers allocate income so that the ratio of MU to price is equalized across goods (utility maximization rule). When TU is maximum, MU becomes zero; if further units reduce satisfaction, MU turns negative and TU falls.
Use: MU underpins downward-sloping demand and the idea of consumer equilibrium.