we are now going to introduce ourselves to the idea of utility in economics now in everyday language if someone says what's the utility of that they're usually saying what's the usefulness of doing that and utility in economics takes that view of utility and extends that a little bit you could view utility and economics as a measure of usefulness usefulness worth value some economist will even say it's a measure of happiness because things that might not have a practical use can still have utility to them in economics because they're giving you some satisfaction or some happiness so i'll even write that over here and as we'll see it is something that economists try to measure or try to quantify and they do it with just utility units so let's see a tangible example of that so let's say you wanted to think about your utility from scoops of ice cream so if we say let's make a call let's make a table here so number of scoops that'll be in my left column and on my right column let's think about total total utility and i will do it in utils you could view that as your unit of utility and let me put my columns in here so there we go and so let's say if i have zero scoops of ice cream well you might guess what my utility is going to be it is going to be zero now what if i have one scoop of ice cream well let's just say that that is 80 utility units and i know what you're thinking so where did you come up with 80 utility units and this is really just an arbitrary number that i'm throwing down here what's more important is what this is relative to my utility for other things so for example using this scale if i said two scoops of ice cream my total utility is 140 80 and 140 aren't what matter what matters is the ratio between the two so if i said my utility for one scoop of ice cream was 800 then if this ratio is true then for two scoops of ice cream my total utility would be 1400 it could be 8 million and 14 million what matters is the relative utility i just happened to anchor on one scoop gives me eight units total utility units but let's keep going if we go with this scale then three scoops of ice cream let's say that this gives me 180 units of utility and i know what you're saying well even if you get the ratio right how do you even know that this is the right ratio well economists will debate how to measure this but there might be ways that you could measure it maybe with dollars with what people are willing to pay and then you can get the ratios you could survey people you could say on a scale of ten one to ten how happy will it make you if you got one scoop of ice cream what if you got two scoops of ice cream what if you got three and then you would want to get these ratios right but of course it is an inexact science but people are trying to quantify this and let's just go to four four scoops of ice cream would give you a total utility let's say we knew it would give you a total utility of 170. now something interesting is happening as you got more scoops of ice cream from zero to one to from one to two from two to three it looks like you are getting more utility but then all of a sudden when you have four scoops of ice cream your total utility goes down a little bit maybe it's because people can't eat four scoops of ice cream and they say what do i do with that and they just have they're left with a bowl of melted ice cream and so it doesn't give them as much utility it makes them feel bad somehow as having three bowls of ice cream or three scoops of ice cream another thing to think about is how much does the total utility increase every time you get an incremental unit of that thing and we'll talk about it in more depth in future videos but that general idea of how much more utility you get for that incremental unit and it cut in economics when we're talking about what happens on the increment we use the word marginal a lot marginal utility utility sometimes abbreviated mu and this would still be in utility units and so we could start with that first going from zero to one i'll start with that first scoop of ice cream what's the marginal utility well it gave you an incremental 80 units of utility so the marginal utility is 80. now what about that second scoop of ice cream well we know when you had one you had 80 total utility units and now when you have two you have 140 so that incremental second scoop gave you to go from 80 to 140 it gave you 60 extra units of utility so notice you were really you really increased your happiness or you got a lot of value out of that first group and you still got value out of that second scoop but it's a little bit less because you're not maybe just as hungry you're getting a little bit tired of the ice cream and then that continues to happen on that third scoop to go from 140 to 180 that third scoop gave you 40 units of utility and then as we talked about when you add on that fourth scoop it didn't even add to your total utility it took away from your total utility so it actually had a negative marginal utility it is negative 10. that fourth scoop actually took away from your happiness so i will leave you there you have this idea of utility total utility and we also looked at marginal utility and you see in this example and this is typical that marginal utility typically decreases as you get more and more units of that thing and in future videos we're going to use this framework of utility total utility marginal utility to think about how folks might make rational decisions to optimize their total utility