Marginal Utility Calculator

Calculate Marginal Utility







Formula

The formula to calculate the marginal utility (MU) is:

\[ MU = \frac{Q_F - Q_I}{U_F - U_I} \]

Where:

What is Marginal Utility?

Marginal utility is a term used in finance to describe the satisfaction gained by a consumer through consuming additional units of a good. For example, the satisfaction gained from eating an additional donut after eating one donut. In general, the satisfaction will have diminishing returns with more units consumed and sometimes negative returns. For example, most people would feel sick eating 20 donuts as opposed to 2.

Example Calculation

Let's assume the following values:

Using the formula to calculate the marginal utility:

\[ MU = \frac{18 - 10}{2 - 1} = \frac{8}{1} = 8 \]

The Marginal Utility (MU) is 8.