Total Utility
Total utility is the sum of all marginal utility you get from a thing. (See: Marginal Utility.)
Every time you get home, your dog greets you, and you both have a nice little moment. Each of those moments comprise marginal utility—a small piece of total utility. The total utility of happiness you get from your dog is all of those moments added up over your entire relationship with Fido.
Food is another example: each bite of food has marginal utility. All of those bites add up to create your total utility. Since your first bite of pizza is probably more enjoyable than your last bite of pizza, your first unit of marginal utility of that pizza is no doubt much higher than your last bite. Diminishing marginal utility.
Since marginal utility often diminishes with consumption, total utility isn’t as easy as 5 bites of pizza x 1 util = 5. It’s more complicated than that, which is why we need to understand marginal utility to get an accurate picture of what our total utility is for a good or service. And total utility, compared to total costs, is how we decide if something is worth it or not.
Dogs...definitely worth it. Pineapple pizza? Eh...maybe not.
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Econ: What are Total Utility and Margina...4 Views
And finance Allah shmoop what our total utility and marginal
utility utility is in the eye of the beholder One
person might see high utility in some delicious slices of
pineapple pizza while another person only sees negative utility because
they believe pineapple on pizza together are tantamount to blasphemy
Well same goes with a nice car which has not
only transport utility but social utility One person might decide
they'll gain some much needed social points with a snazzy
a set of wheels there while another person might be
afraid they'd be you know beauty is a tool you
know Been there done that A convertible might offer high
utility around for someone living in Southern California and low
utility for someone living in New York where they take
the subway everywhere High quality socks for Christmas Yeah hi
utility If that's just what you needed Maybe you can't
get enough Willie socks or you collect socks with cool
patterns and need a real hobby Quickly Low utility If
you're a ten year old boy who was expecting something
decent not not socks Yeah Sorry there pal How much
utility Something Khun give someone Depends on that person's needs
and preferences utility even has its own standard measurement You
tools Yeah that's one standard utilities you don't well getting
into the nitty gritty of utility We have marginal utility
and total utility Marginal utility is the UDA Lt's a
consumer games from consuming one more unit of a good
or service Those marginal yodels added up well Is Total
Utility III the total amount of utility gained from a
good or service So let's take popcorn Salty buttery movie
theater popcorn you can't resist It's buttery goodness Plus you
don't go to the movies that off and you deserve
this popcorn In general we decide to buy something when
the march on the utility of a good or service
is greater than the marginal cost of it Well in
this case you're willing to pay that five bucks for
the popcorn because it's so worth it Yes all fourteen
thousand calories in that bucket Will the first bite of
popcorn is the most delicious Ah high marginal utility and
it gets your taste buds watering and ready for more
The second bite is great too as is the third
and fourth Lots of you tells Eventually though you don't
feel so good you just consumed more fake butter than
you'd wish on your worst enemy All of a sudden
you stopped eating the buttery deliciousness It's not worth a
full blown a stomach ache in the eight thousand calories
for the rest of the night So as you can
see your demand for popcorn like your demand Kerr for
most things is downward sloping The marginal value of that
in plus one piece of popcorn declines really fast when
marginal cost is greater than marginal utility while we stop
consuming additional marginal units of a good in this case
the marginal cost of eating one more handful of popcorn
plus the money you already paid for it just isn't
worth the marginal benefit you'd get out of the next
hand Phil since well it'll make you feel worse overall
All right well if you're the kind of person who
does keep eating it well even though you're not enjoying
it anymore because you paid for it well that's falling
for the sunk cost Fallaci yet don't do that It
doesn't make sense to pay for negative marginal utility Just
take your net positive utility and walk away slowly right
that's the sunk cost already paid It sunk its guns
Nothing you can do about it ever to get it
back All right well this downward spiral of marginal utility
starting out high with first unit of consumption and finishing
low with the last unit of consumption is called the
law of diminishing marginal returns As we consume more and
more of a good or service are marginal utility from
each additional unit consumed gets less and less Each bite
is less enjoyable than the last While some goods and
services we consumer subject to diminishing marginal utility like food
others can have constant or increasing marginal utility When people
first became addicted to a social media platform it's likely
their marginal utility was increasing which is why they started
using it more and more and more and more and
then became hooked And this is why we care about
marginal utility It often changes as we consume more and
more of a certain good or service If you want
to know how and why people consumers a bit of
a good or service the way they do well take
a look at their marginal utility when we want to
take a step back and look at the big picture
of a good or service Yeah that's where total utility
comes in If you want to compare goods and services
against each other while you can compare their total utilities
for instance don't regret that bucket of popcorn Your total
utility from popcorn consumption was decidedly worth the cost Each
bit of marginal utility from each bite added to the
total utility of the entire popcorn experience So it was
a good overall net of everything to you if anything
Well you should regret that one colonel and you still
have stuck in the back Your teeth there With any
luck it'll come out by Tuesday All right that's enough 00:04:43.615 --> [endTime] You tools Ah