Relationship Between TU, MU and AU
1. Explain Graphically the relationship of TU, AU and MU? Ans. There are three types of Utility: • Total Utility (TV) • Marginal Utility (MU) • Average Utility (AU) • Total Utility : The Utility which a consumer obtains by Consuming all units of a commodity Particular Period of time is called total utility (TU). TU = ( Utility derived from unit 1 + Utility derived from unit 2+........Utility derived from unitn) TU = (Un + Un₂ +........Unn) • Marginal Utility : The utility which consumer obtains by Consuming extra unit of a commodity is called marginal utility (MU). Marginal utility is the change in total utility due to change in unit of consumption of commodity. Margial Utility = change in total utility / change in whit consumption of commodity. • Average Utility : AU as the name by total utility divided suggests it is the units of commodity Consumed. AU= Total Utility / units of Commodity Consumed. It is satisfaction enjoyed by the Consumer from per unit Commodity Consume...