Marginal Utility

The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important economic concept because economists use it to determine how much of an item a consumer will buy. Positive marginal utility is when the consumption of an additional item increases the total utility. Negative marginal utility is when the consumption of an additional item decreases the total utility.

For example, if you were really thirsty you'd get a certain amount of satisfaction from a glass of water. This satisfaction would probably decrease with the second glass, and then decrease even more with the third glass. The additional amount of satisfaction that comes with each additional glass of water is marginal utility.

Investment dictionary. . 2012.

Look at other dictionaries:

  • Marginal utility — In economics, the marginal utility of a good or service is the utility gained (or lost) from an increase (or decrease) in the consumption of that good or service. Economists sometimes speak of a law of diminishing marginal utility, meaning that… …   Wikipedia

  • marginal utility — Econ. the extra utility or satisfaction derived by a consumer from the consumption of the last unit of a commodity. [1920 25] * * * In economics, the additional satisfaction or benefit (utility) that a consumer derives from buying an additional… …   Universalium

  • marginal utility — noun (economics) the amount that utility increases with an increase of one unit of an economic good or service • Topics: ↑economics, ↑economic science, ↑political economy • Hypernyms: ↑utility * * * noun …   Useful english dictionary

  • marginal utility — noun Date: 1890 the amount of additional utility provided by an additional unit of an economic good or service …   New Collegiate Dictionary

  • marginal utility — noun The additional utility to a consumer from an additional unit of an economic good …   Wiktionary

  • marginal utility — The change in total satisfaction as a result of consuming one additional unit of a specific good or service. Bloomberg Financial Dictionary …   Financial and business terms

  • marginal utility — profit derived from each additional unit produced by a manufacturer (Economics) …   English contemporary dictionary

  • marginal utility — /ˌmɑ:dʒɪn(ə)l ju: tɪlɪti/ noun satisfaction gained from using one more unit of a product …   Marketing dictionary in english

  • Law Of Diminishing Marginal Utility — A law of economics stating that as a person increases consumption of a product while keeping consumption of other products constant there is a decline in the marginal utility that person derives from consuming each additional unit of that product …   Investment dictionary

  • law of diminishing marginal utility — Econ. the law that for a single consumer the marginal utility of a commodity diminishes for each additional unit of the commodity consumed. * * * …   Universalium

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