Marginal Utility

… a core term used in Economic Analysis and Atlas102

Definition

Investopedia (reference below) defines an marginal utility as the additional satisfaction a consumer gains from consuming one more unit of a good or service.

Investopedia goes on to say:

“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.

“Economists use the concept of marginal utility to measure happiness and pleasure, and how that affects consumer decision making. They have also identified the law of diminishing marginal utility, which means that the first unit of consumption of a good or service has more utility than the next units of consumption.”

Atlas topic, subject, and course

Consumer Theory and Elasticity of Demand and Supply (core topic) in Economic Analysis and Atlas102 Economic Analysis.

Source

Investopedia, Marginal Utility at http://www.investopedia.com/terms/m/marginalutility.asp, accessed 18 May 2016.

Page created by: Ian Clark, last modified 18 May 2016.