“Utility means satisfaction which a person obtains by use of specific good. All the goods have some sort of quality which can be utilized. As a common example water has an ability to quench thirst or a car has an ability of transportation etc. utility of any good might be different in value for two people. For example: a book has more utility for a literate person as compared to an illiterate person.

Aspects/Forms of utility:

Following are the some aspects of utility:

Initial utility:

Satisfaction achieved by consuming first unit of good is called initial utility.

Marginal utility:

A change in total amount of utility by consuming an additional unit of a good is called marginal utility. There are two laws of marginal utility.

  • Law of Diminishing marginal utility.
  • Law of Equi-marginal utility.

Positive utility:

A good is supposed to have positive utility when its total utility is increasing and its marginal utility is positive.

Zero utility:

The point where marginal utility becomes zero and total utility stop increasing is point of zero utility or the point of satiety.

Negative utility:

At this stage total utility of a good starts decreasing and marginal utility comes below to the point zero.

Total utility:

It is the sum of all of the units consumed of a certain good.

Relationship between Total Utility and Marginal Utility:

Relationship between the two can be summarized in following three points.zero-utility-table

  • During the process of consuming goods continuously; total utility rises as long as marginal utility is positive i.e > 0.
  • At the point where marginal utility is = 0; total utility is maximum.
  • When marginal utility becomes negative i.e < 0; total utility starts falling.


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