# Top 3 Difference Between Total Utility and Marginal Utility

Utility in economic terms is the satisfaction that is derived by a person from the consumption of any goods or services. There are two types of utility specified in economics, namely, total utility and marginal utility. It is used to analyse customer’s preferences within a marketplace.

## What is Total Utility?

Total utility is the overall satisfaction that a consumer derives from the consumption of particular goods and services. Each individual unit of goods or services has a marginal utility of their own.

Total utility is the sum of marginal utilities of all such individual items.

The primary concern of a customer is to derive the largest amount of utility with the least cost incurred.

To understand total utility, we must look into the concept of the law of diminishing marginal utility. It states that as more units of a single good or service are consumed, the additional satisfaction called the marginal satisfaction drops. The first good consumed provides the highest marginal utility, the second one a little lesser, and so on.

Also check: What is utility?

## What is Marginal Utility?

Marginal utility is the concept used by economists to quantify the amount of satisfaction that is gained by the consumption of additional units of a good or service. It is an important concept that is used by economists to determine how much quantity of an item a customer is willing to purchase.

Marginal utility helps to identify how the satisfaction levels influence the customer’s purchase decision.

Positive marginal utility is said to occur when the consumption of an additional item increases the total utility, while negative marginal utility occurs when the consumption of an additional item decreases the total utility of the item.

The following table will help students understand the significant points of difference between total utility and marginal utility.

 Total utility Marginal utility What does it mean? It is the aggregate of satisfaction that a consumer derives from the consumption of any particular goods or services. It is the amount of satisfaction derived by a consumer by additional consumption of a unit of any particular goods or services. Rate of increase Total utility rises as more consumption is done. Marginal utility diminishes with an increase in total utility. Result It suffers from diminishing returns. Marginal utility reduces with the consumption of each additional unit.

This article discusses the key concepts of total utility and marginal utility and helps the readers understand the difference between them. For more interesting updates, stay tuned to BYJU’S.