# Marginal utility and total relationship advice

### Demand curve as marginal benefit curve (video) | Khan Academy

The Law Of Diminishing Marginal Utility states that all else equal as consumption increases the marginal utility derived from each additional. Answer to Explain the relationship between total utility, marginal utility and the Law of Diminishing Marginal Utility and the the. In this article we will discuss about the relationship between Total Utility and Marginal Utility. Every commodity possesses utility for the consumer. When the.

We're going to look at the exact same demand curve, the exact same relationship between price and quantity, but we're going to conceptualize it in our heads in a slightly different way. We're going to think about it in terms of quantity driving price.

### Fixed, variable, and marginal cost (video) | Khan Academy

To think of it that way, imagine that we are the producers of this given model of a new car. We go the other way. If we only produced one car a week, how much could we get for that car? Let's say somehow you're able to figure that out. You're able to read people's minds or you have some type of a market study.

Then you would plot that point right over there. Now let's go, let's keeping asking ourselves for more units. Let's say, what if we wanted to sell two units?

For that second unit, the second person who is going to need to buy your car, might not be as excited about it. That second person would be willing to forego So if you wanted to sell two units, if you insist on selling two units, and if you're assuming you're going to give the same price for everyone.

• Fixed, variable, and marginal cost
• Marginal utility

We'll talk about in the future how you might give different prices to different people. Now clearly that first person is definitely going to jump at it. They're going to be able to get the car for more than they were willing to pay. More than what it was worth to them. Now the same logic.

### Marginal utility | economics | posavski-obzor.info

Now what if we want to sell three cars? What if we want to sell three cars a week? In this column, I have the different numbers of programmers. And then let's say based on other studies or industry studies or our past experience, this tells us how many lines of programming code we can get per month. And obviously, lines of code isn't maybe the best way to measure things because someone can write good lines or bad lines of code.

But let's just say this is one way of measuring productivity for software engineers. So the first thing I'm going to think about is what are my fixed costs? So what am I going to spend no matter how many software engineers I hire for this project? And for the sake of this video, my fixed costs will be the office space and the electricity and let's assume I just have an office that can accommodate any number of these programmers.

So that's a fixed cost. That's not going to change depending on the number of programmers I have. And then the other fixed cost, let's say I have a product manager for this project. And I'm going to pay her salary to essentially help spec out what this software should actually do. And that's not going to change regardless of however many programmers I have. So I'm going to go into Excel and go to this little bottom right right over here.

And I'm going to drag that down. Now the variable cost. So if you include the cost of their salary, if you include the cost of their health insurance, you include the extra goodies that they will eat from the company kitchen, whatever it might be. So you see it's cell D7. And actually let me scroll this over so that you can see the cells. So that is cell D7. And let me press Enter. And I just selected that.

## Demand curve as marginal benefit curve

And I can press Enter. And right now, that's nothing. Let me scroll over so we can see everything a little bit better. Let me scroll over a little bit. Now, what are going to be my total costs? My total costs are my fixed costs plus my variable costs.

## Relationship between Total Utility and Marginal Utility

So that's going to be equal to-- and I'm just using my arrow keys right now-- it's going to be equal to F7, right? That's cell F7 plus this one, plus my variable costs. And actually, I can make this true for every row over here. And so what I can just do is I can just take that, drag that all the way down. So now it's going to be 10, times D8. This will be 10, times D9.

So that we can see it right there. And you could, if you click on there, you can actually see what the formula is.

So by dragging that, I was able to get the right formula all the way down. Now the total cost for every row here is going to be two to the left plus one to the left. And so if I drag that down, it'll do that for every row over here. So now this is 25, is the 15 plus the Our total costs are fixed costs plus variable costs.

Now let's think about the average fixed cost. And the average fixed cost, we're going to think about it in fixed cost per line of code produced. And over here, line of code produced is 0. So we're going to divide by 0, which is undefined. So we could leave that blank. But we could fill this one in. So our total fixed costs-- this is going to be our total fixed costs, which is cell F8. I just used the arrow keys to select F8.

Divided by our total lines of code per month. So divided by our total lines of code per month. And then I can do the same thing that I've been doing before. I can drag this down. And then we see what the fixed cost is. And this actually makes sense because the more programmers I add on to this project, the more lines of code I get, I'm using the same fixed costs I'm.

Using the same project manager. I'm using the same office space.

Visualizing marginal utility MU and total utility TU functions

So the cost of that project manager and that office space gets spread out along more and more code. So the fixed cost per line of code goes down as we add more and more programmers. Now what is the average of variable cost? So once again, the variable cost is going to be whatever the variable cost is per lines of code per month.

So when we're talking about average, we're talking about average cost per line of code. So this is per line of code.

Let me write it over here. Per line of code. And I can even say per month. Per line of code per month. Actually, I wanted that spread out more. But the way I've set it up. So let me scroll down.