Utility
Utility == usefulness/worth/value/happiness
“Utility units” is an arbitrary number that can be used as a relative measurement against other options.
Total utility = the total amount of utility units you accrue as you add more units of whatever you’re measuring. E.g. Ice cream - 1 scoop = 80 t/u, 2 scoops = 140 t/u (you get more utility out of two scoops than one scoop)
Marginal utility = the difference between units of whatever you’re measuring. E.g in the ice cream example you got a marginal utility of 80 units going from zero to one, and a marginal utility of 60 going from one to two scoops.
Source:
- https://www.khanacademy.org/economics-finance-domain/ap-microeconomics/basic-economic-concepts/cost-benefit-analysis/v/introduction-to-utility
Graph:
- 126.005 Decision Making - Utility to 126.005.01 Utility - Marginal Utility
- 126.005 Decision Making - Utility to 126.005.02 Marginal Utility - Decision making using Relative Marginal Utility
- 126 Decision Making to 126.005 Decision Making - Utility
- 126.005.01 Utility - Marginal Utility to 126.005 Decision Making - Utility
- 126.005.02 Marginal Utility - Decision making using Relative Marginal Utility to 126.005 Decision Making - Utility