Superiority of Indifference Curve Analysis Over Marginal Utility Analysis

1) Measurement of Utility :
The indifference approach is superior to the cardinal utility analysis (Marginal Utility) because it measures utility ordinally.
A consumer can compare the satisfaction (utility) derived from different goods or from different units of the same good.The ordinal method make this technique more realistic.

2) Study combination of two goods:
The cardinal utility approaches a single commodity analysis in which the utility of one commodity is regarded independent of the other.It does not speak of substitute or complementary goods, but group them as one commodity.

This assumption is less realistic as consumer buys not one but combination of goods at time.

The indifference curve technique is a two commodity model which discusses consumer behavior in case of substitutes, complementaries and related goods.

3) Marginal Utility of Money is not constant :

The utility analysis assumes constant marginal utility of money because it takes consumer income to be constant, but this is not realistic condition as with rise or fall in income the Marginal utility of money changes.

Total Utility and Marginal Utility

Relationship between Total Utility and Marginal Utility

There is a definite and well defined relationship between total utility and marginal utility.

Total Utility

It refers to the total satisfaction derived by the consumer from the consumption of a specific quantity of a commodity.

For example, the total utility of consuming two apples is the total satisfaction that these two apples provide.

Marginal Utility

It refers to the additional utility derived from the consumption of an additional unit of a commodity.

The relation between total utility and marginal utility is shown in below graph.

Graph ‘A’ shows that the total utility increases first,  reaches the maximum and then starts decreasing

Graph ‘B’ shows continuously decreasing marginal utility curve

marginal utility

Let us analyze the graph deeply