marginal utility

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marginal utility

The graph shows the concept of diminishing marginal utility.

Definition
  1. Noun:
    • The additional satisfaction or benefit gained from consuming one more unit of a good or service: In economics, "marginal utility" refers to the increase in total utility (satisfaction or usefulness) that a person receives from consuming an additional unit of a specific good or service within a given period.
Usage Examples
  • Noun:
    • The concept of diminishing marginal utility explains why the first slice of pizza brings more satisfaction than the fourth.
    • Economists calculate marginal utility to understand consumer choice and demand.
    • For him, the marginal utility of another cup of coffee was very low, as he was already quite alert.
Advanced Usage

  • Law of Diminishing Marginal Utility: This fundamental economic principle states that as a person consumes more units of a good, the marginal utility from each additional unit eventually decreases.

    • The law of diminishing marginal utility helps explain why demand curves typically slope downward.

  • Marginal Utility per Dollar: A concept used in consumer equilibrium analysis, comparing the marginal utility derived from a good to its price.

    • A rational consumer will allocate spending so that the marginal utility per dollar is equal for all goods purchased.
Variants and Related Words

  • Utility (n): The total satisfaction or benefit derived from consuming a good or service.

    • The utility of a product is subjective and varies from person to person.

  • Marginal (adj): Relating to or resulting from small or incremental changes.

    • The marginal cost of production is the cost of producing one more unit.
Synonyms
  • Incremental benefit: The extra advantage gained from an additional unit.
  • Additional satisfaction: The extra pleasure or usefulness obtained.
Related Concepts (Not Phrasal Verbs)
  • Marginal analysis: The examination of the additional benefits of an activity compared to the additional costs incurred.
  • Total utility: The aggregate satisfaction from consuming a given quantity of a good or service.
marginal utility

The graph shows the concept of diminishing marginal utility.

Noun
  1. (economics) the amount that utility increases with an increase of one unit of an economic good or service