marginal utility


marginal utility

noun

Definition of MARGINAL UTILITY

:  the amount of additional utility provided by an additional unit of an economic good or service

First Known Use of MARGINAL UTILITY

1890

marginal utility

noun    (Concise Encyclopedia)

In economics, the additional satisfaction or benefit (utility) that a consumer derives from buying an additional unit of a commodity or service. The law of diminishing utility implies that utility or benefit is inversely related to the number of units already owned. For example, the marginal utility of one slice of bread offered to a family that has five slices will be great, since the family will be less hungry and the difference between five and six is proportionally significant. An extra slice offered to a family that has 30 slices will have less marginal utility, since the difference between 30 and 31 is proportionally smaller and the family's appetite may be satisfied by what it already has. The concept grew out of attempts by 19th-century economists to explain the fundamental economic reality of price.

Browse

Next Word in the Dictionary: marginate
Previous Word in the Dictionary: marginalize
All Words Near: marginal utility

Seen & Heard

What made you want to look up marginal utility? Please tell us where you read or heard it (including the quote, if possible).

Get Our Free Apps
Voice Search, Favorites,
Word of the Day, and More
Join Us on FB & Twitter
Get the Word of the Day and More