How do i calculate Consumer utility?

Answer 1

Consumer utility refers to the level of satisfaction or happiness that a consumer derives from consuming a particular good or service. Here is a step-by-step process to calculate consumer utility:

1. Assign a numerical value to represent the level of utility experienced by the consumer. This value can be arbitrary as long as it is consistent throughout the calculation process.
2. Identify the specific goods or services that the consumer is consuming.
3. Determine the quantity or amount of each good or service consumed.
4. Assess the marginal utility for each unit consumed. Marginal utility refers to the change in total utility resulting from consuming an additional unit of a good or service.
5. Sum up the total marginal utilities for all units consumed to obtain the total utility.
6. Finally, assign the numerical value obtained for total utility to represent the consumer's level of satisfaction or happiness.

It is important to note that the calculation of consumer utility is subjective and can vary from individual to individual, as preferences and tastes differ.