The document explains the concept of utility in consumer behavior, defining it as the satisfaction derived from a commodity based on individual needs and wants. It distinguishes between total utility and marginal utility, illustrating how total utility increases with positive marginal utility until reaching a maximum, after which it declines with negative marginal utility. Various scenarios are provided to demonstrate how different individuals may derive different levels of utility from the same item.

1. Consumer’s Behaviour
S.A. Qureshi

2. UTILITY
The Utility (The Basis of Consumer Demand) Utility is the power or property of a commodity to satisfy
human needs. Utility depends upon willingness or want of the person.
Example: Water has power to quench the thirst of some person. So Water has UTILITY.
Utility is ethically neutral. (Alcoholism, drugs, smoking etc.)

3. UTILITY and USEFULNESS

4. UTILITY

5. UTILITY
Would two people get the same
Satisfaction from the same item?
Would a glass of coke have the same
UTILITY FOR A THIRSTY PERSON AND the person who is
not thirsty.
DIFFERENT PEOPLE
WILL HAVE DIFFERENT UTILITY
FOR THE SAME ITEM

6. Units Consumed MU TU
1 25 25
2 20 45
3 15 60
4 10 70
5 5 75
6 0 75
7 -5 70
• Initial Utility
• Marginal Utility
• Total Utility
• Zero Utility
• Point of Satiety
• Positive Utility
• Negative Utility
Utility and its different concepts?

7. Total Utility and Marginal Utility
Total utility
• Sum total of utilities derived from consumption of
all units
Marginal utility
• change in utility
• Additional utility derived after consuming one
additional unit
• Mathematically expressed as 𝐌𝐔 = 𝐓𝐔 𝐧 − 𝐓𝐔 𝐧−𝟏
Units Consumed MU TU
1 25 25
2 20 45
3 15 60
4 10 70
5 5 75
6 0 75
7 -5 70

8. Relationship between total utility and marginal utility?
1. TU increases at increasing rate,
MU increases.
2. TU increases at decreasing rate,
MU decreases
3. TU reaches maximum, MU is zero
4. TU decreases, MU negative
TU
Q1 2 3 4 5 60
20
-5
5
10
15
MU
25
45
30
35
40
50
55
75
60
65
70
80
7

9. Relationship between total utility and marginal utility?
TU
Q1 2 3 4 5 60
20
-5
5
10
15
MU
25
45
30
35
40
50
55
75
60
65
70
80
7
• So long as the marginal utility is positive, total utility increases. That is
marginal utility remain positive upon consuming first five units of the
good, and the total utility increases from 25 to 75 utils.
• When marginal utility becomes zero, total utility reaches at its highest
point. As marginal utility is zero total utility is maximum that is 75
utils. This is also shown in the diagram with the help of dotted line.
• When the marginal utility is negative, total utility starts to decline. In
the above given table as the 7th unit is consumed the marginal utility
becomes negative and the total utility starts to fall. This is shown in the
diagram afterword the dotted line. i.e. as the MU curve enters in the
negative region the TU curve bends down after maximum level.

10. Thank you