e assigned to those units are subject to the judgment of the designer of the scale. An accurate prediction of water turning to ice can be made when a thermometer using a Celsius scale reaches 0. But the units of measure themselves are meaningless because this same events takes place when a Fahrenheit thermometer shows a temperature of 32.The concept of utility allows for predictions about consumption choices in much the same way. It must be pointed out, however, that marginal utility theory is not as accurate as the theory that allows us to predict when water will turn to ice. Total utility refers to the total benefit, or pay out, derived from the consumption of goods or services. The level of consumption determines the quantity of total utility. This concept can be illustrated by using the consumption possibilities of House A. Table 2 shows House As total utility from consuming different quantities of books and beverages. If no books are purchased in a month, there is no utility from books. If one book is purchased monthly 50 units of utility are assigned. Total Utility from Books and BeveragesTable 2Books Beverages___Monthly QuantityTotal UtilityMonthly Quantity Total Utility00001501752882117312131534150418151755206619662257214724382298260924192761025010291As the number of book purchases increase, total utility increases. If ten books are purchased 250 units of utility are awarded. The other part of the table shows the total utility of beverage consumption. As beverages are consumed total utility rises.Marginal utility is that change in total utility resulting from a one-unit increase in the quantity of consumed goods or services. When consumption of books moves from four to five monthly, total utility from books increases from 150 to 175 units. Thus, for House A marginal utility of procuring a fifth book each month is 25 units. Marginal utility appears midway between the quantities consumed. ...
