What is the total profit?

Total utility is understood as the total satisfaction achieved by a person for the consumption of a certain amount of goods or services. It is an economic concept that is calculated from the sum of the profits that the consumption of goods and services contributes to an individual, so that this type of utility increases as the number of units of a product or service grows, and allows knowing when the individual reaches full satisfaction of the need they have, that is, the highest point of the curve (called "point saturation ").

Ratio of total utility to marginal utility

Although total profit grows as the number of units of a product or service increases, the marginal utility it decreases as the number of units of a product increases. It is here where we can find the relationship between total utility and marginal utility, since, on the one hand, total utility represents the satisfaction obtained by all the consumed quantity of goods or services, while marginal utility refers to the increase in the total utility produced by the last unit consumed of that good or service.

Total profit example

An example that we are going to offer you so that you can understand the performance of total utility is food consumption. Suppose that our appetite is whetting and we just go through an ice cream parlor. The first ice cream that we eat will offer us a high utility, since it will calm our hunger. The second ice cream we will still enjoy, but we will not be so hungry anymore. The third cake, for its part, will no longer be as useful as the first, because we are filling the stomach. And, finally, the ice cream room is already too much and will not bring us any use.

In economic matters, it is understood that total utility is the utility provided by the consumption of all units of a good or service (in this case, 4 ice creams), while marginal utility is that provided by each additional unit of the good or service. Therefore, the total utility is ascending when the marginal utility is positive: each additional unit offers less utility than the previous one, and can even turn negative.

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